More Local Marketing
My recent post about the role of local marketing has stirred some thinking and deserves a revisit.
I proposed that the role of local marketing is to take advantage of human behavior and not try to change it. Some readers disagreed with my example and, generally, took exception with my premise. Perhaps, my restaurant example wasn't quite as illustrative as I had hoped so here are a couple more examples that should prove my point:
I) You are the owner of an ice cream shoppe and the local cable TV rep is visiting you the week after
Thanksgiving. He" the in that to able be your season and of you are expenditure.
He says, "But, now is your chance to gain market share. There are plenty of people that eat ice cream in the winter but not too many ice cream shoppes advertising to this market. You should take advantage of the lack of competition and advertise heavily. What will happen is that you will get the majority of the ice cream eaters during the winter and when the busy season starts your market share will translate into more customers than you'd ever be able to get with a campaign that starts in the summer."
Should you 1) Invest the $5,000 per month for the next 12 months that the seller is recommending? or 2) Offer the seller a mint chocolate chip ice cream cone for his trouble and escort him to the door?
The answer is B. You know it. I know it and the cable tv seller knows it. While it may be true that you would gain market share you would be gaining a share of the smallest market of the year. Imagine that there are 250 ice cream eaters in the winter and you are able to garner a 50% share with your advertising. When the summer comes around there are 5,000 ice cream eaters. You won't have a 50% share of the 5,000 because they were ignoring your advertising all winter long. You will have a 50% share of the 250 and start with the same share as all the other ice cream shoppes with the remaining 4,750. You are far better off saving your $5,000 per month in November, December, January, February, March and April and spending $15-$20,000 per month in May, June, July and August. This might not get you a 50% share of all the summer ice cream eaters but if it gets you a 10% share you're still better off than you would have been with the winter time strategy.
What should you do during the winter months to increase business? Something cheap. Ask nearby restaurants and other small businesses if they would do a cross promotional partnership with you. Print up some inexpensive flyers describing a winter special and get them out to the winter sports teams. Think "whisper campaigns" instead of broadcast campaigns.
II) You operate a giant beverage company that wants to increase its volume per capita. Your beverages are consumed at lunch and dinner and in the mid-afternoon and late at night. One day you're brainstorming with the
marketing team and someone suggests that the best possible way to increase consumption per person would be to get people to drink the product in the morning. This is what Coca-Cola decided to do in the 80's in Atlanta. Check out this article from January 20, 1988.
The most fun part about this marketing campaign was that experts lined up behind Coca-Cola and suggested that the plan just might work if people could get over "the yuck factor". One expert said that at least a cold Coke in the morning was a "safer" drink for commuters than hot coffee. Coke thought that trying to increase their share of beverage consumption in the morning made sense because only 12% of the population drank soft drinks in the morning. "Look at the upside," they reasoned.
Yeah, but drinking soft drinks in the morning just isn't what people do and the campaign was abandoned after being tested in four major metros.
What should Coca-Cola have done instead? I'm not sure exactly but did you know that in 1988 Starbucks had only a couple of dozen locations?
Today they have more than 15,000 and (to the best of my knowledge) none of them sells Coca Cola.
I proposed that the role of local marketing is to take advantage of human behavior and not try to change it. Some readers disagreed with my example and, generally, took exception with my premise. Perhaps, my restaurant example wasn't quite as illustrative as I had hoped so here are a couple more examples that should prove my point:
I) You are the owner of an ice cream shoppe and the local cable TV rep is visiting you the week after
Thanksgiving. He" the in that to able be your season and of you are expenditure.He says, "But, now is your chance to gain market share. There are plenty of people that eat ice cream in the winter but not too many ice cream shoppes advertising to this market. You should take advantage of the lack of competition and advertise heavily. What will happen is that you will get the majority of the ice cream eaters during the winter and when the busy season starts your market share will translate into more customers than you'd ever be able to get with a campaign that starts in the summer."
Should you 1) Invest the $5,000 per month for the next 12 months that the seller is recommending? or 2) Offer the seller a mint chocolate chip ice cream cone for his trouble and escort him to the door?
The answer is B. You know it. I know it and the cable tv seller knows it. While it may be true that you would gain market share you would be gaining a share of the smallest market of the year. Imagine that there are 250 ice cream eaters in the winter and you are able to garner a 50% share with your advertising. When the summer comes around there are 5,000 ice cream eaters. You won't have a 50% share of the 5,000 because they were ignoring your advertising all winter long. You will have a 50% share of the 250 and start with the same share as all the other ice cream shoppes with the remaining 4,750. You are far better off saving your $5,000 per month in November, December, January, February, March and April and spending $15-$20,000 per month in May, June, July and August. This might not get you a 50% share of all the summer ice cream eaters but if it gets you a 10% share you're still better off than you would have been with the winter time strategy.
What should you do during the winter months to increase business? Something cheap. Ask nearby restaurants and other small businesses if they would do a cross promotional partnership with you. Print up some inexpensive flyers describing a winter special and get them out to the winter sports teams. Think "whisper campaigns" instead of broadcast campaigns.
II) You operate a giant beverage company that wants to increase its volume per capita. Your beverages are consumed at lunch and dinner and in the mid-afternoon and late at night. One day you're brainstorming with the
marketing team and someone suggests that the best possible way to increase consumption per person would be to get people to drink the product in the morning. This is what Coca-Cola decided to do in the 80's in Atlanta. Check out this article from January 20, 1988.The most fun part about this marketing campaign was that experts lined up behind Coca-Cola and suggested that the plan just might work if people could get over "the yuck factor". One expert said that at least a cold Coke in the morning was a "safer" drink for commuters than hot coffee. Coke thought that trying to increase their share of beverage consumption in the morning made sense because only 12% of the population drank soft drinks in the morning. "Look at the upside," they reasoned.
Yeah, but drinking soft drinks in the morning just isn't what people do and the campaign was abandoned after being tested in four major metros.
What should Coca-Cola have done instead? I'm not sure exactly but did you know that in 1988 Starbucks had only a couple of dozen locations?
Today they have more than 15,000 and (to the best of my knowledge) none of them sells Coca Cola.
Tim,
I disagreed with you on the auto example, but think you've hit the nail on the head with the latest two examples.
When considering any kind of expenditure, a marketer needs to ask, "If I win, what's the prize?". In the case of the ice cream shop, it's hard to imagine that in even the best case the incremental business will justify a $60,000 year-round expenditure.
One quibble, though -- I do think a good year-round campaign would increase the ice cream shop's share of the 5,000 summer consumers. Although they may be filtering out as much of the advertising as they can in the winter, the message is still getting into their heads, and it will affect their impulse decisions come summer. But the increase likely wouldn't justify the expense.
The Coke-in-the-morning idea was trying to convince the public to do something that they really, really didn't want to do. There isn't enough marketing money in the world to make that work.
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In sales, it is usually the case that we look for the customers pain and offer the solution, rather than tailoring the customer around our product. I am constantly confused, by marketing that ignores the sales process of its own product. Each case you highlight shows that in a properly researched sales scenario, you are on weak ground, but I wonder how much conversation takes place between sales and marketing? Are they not on the same side?
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Dear SAML,
As a former owner of an ice cream franchise and moderately unsuccessful advertising salesperson, I found your comments about seasonal selling to be right on the mark! It is true that advertising absolutely cannot change consumer behavior.
When I first bought the ice cream franchise, I was advised by a regional manager (who had no experience in advertising sales) to "shoot when the birds are flying", or something like that. I can tell you from experience (and wasted dollars) that he -- and the SAML -- are correct!
One other thing. Having been on the ad sales side first, then owner of a small retail business, this observation. Your average restaurant owner/manager gets cold-called by walk-in salespeople 5, 10, 20 times a day, each salesperson expecting him to drop what he's doing and hear a pitch. Having been on both sides, I can tell you that the sales professional who ultimately got a piece of business was the one who used the cold call ONLY as a vehicle for a follow up appointment. It is far more respectful of the time of a business owner who might be juggling 20 issues at any given time.
Way to go, SAML. You rock!
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Thanks for the comment, Phil! Regarding your quibble: A good year-round campaign should increase share of mind for the advertiser which should, in turn, increase revenue in the future. The challenge for the small business is that they can't wait for results and they are better off saving their money to make a bigger impact when results are more likely.
In the ice cream example, I would be in favor of a chain of ice cream shops advertising year round to gain share of mind. This would be especially true if the group was new to a market. As a group, the owners could probably invest some money that didn't require an immediate impact to top line revenue.
In the car example, I am also in favor of a chain like Team Automotive or Nalley Automotive (in Atlanta) advertising through thick and thin. Branding your name as a destination of choice for the reasons stated in the advertising will influence a consumer when they become a "now" buyer. Individual auto dealers, though, can't make that equation work.
These truths are probably the reason we see the proliferation of chains in every industry.
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You rock, Mike! Thanks for the comments, compliments and wisdom from someone who has been there.
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Tim,
Perhaps you were referring to my comments on your last post when you say some readers disagreed with your example… however, nothing to disagree with this time around… I like these examples… job done.
By the way… the restaurant that I mentioned in my response to your previous post majored on two things… Chili Con Carne… it is the best in the world (notice my modesty)… and build your own Ice Cream dessert!
I paid a fortune for marketing and advertising back then… I just wish the guys I hired had your insight… it would have saved me a fortune!
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You weren't the only one vigorously debating my stance, Colin! I appreciate the challenge to my premise because it makes for a more interesting forum and it forces me to think deeply about all of my theories. Two very good results so keep those comments coming!
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I have a question.
If the salespeople believe advertisiers should be on year-round to build market share, why do they only advertisde during ratings periods?
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I appreciate your question, Mike, in the same way that a parent appreciates one's teenager inquiring about their youthful drug use.
First, media seller have no control on the advertising plans of their medium because if they did they would choose to advertise year round. Sellers love it when their medium advertises because it brings in business and increases awareness of their brand.
The better question would be: If most media propose that their clients advertise year round why don't the executives of those media lead by example?
The answer to that is that media executives are slaves to Wall Street's expectations and have sold their <insert inflammatory body part here> in exchange for stock options.
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Tim,
I would argue that in tradition situations you are 100% correct. Their is a scenario however that does not support your advice and that is that of the startup that has a true game changer. If there is tangible benefit in a new way of doing things, the local marketer must take advantage of it to maintain a competitive advantage.
Our blogs and before that websites are a perfect example.
Google has struggled to go local, but as they make strides, if you are at the top of any list, it is a great value. SEO is a game changer that local marketers should pay attention to. The few that are, will win many competitions for consumer dollars.
In San Francisco, yelp is king. By getting people to comment on your business you generate more customers. All of these new ideas need trumpet blowers to get others excited.
At the end of the day, the return must be there, but in these cases people had to take a risk from the norm and venture into new ideas.
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First, recall that my stance is that local marketing should take advantage of human behavior and not try to change it. The reason is that local marketers don't have enough money to advertise long enough or with sufficient strength to change the behavior of a large group of people.
While I may have implied that no amount of marketing can change human behavior (because I mentioned Coca Cola), that was not my position.
However, I don't believe that the crop of technologies that have developed recently are necessarily good examples of a change in human behavior. Take Google for example. Users go to Google in order to find information. Not that different from the Yellow Pages or the library or Enclyclopedia Brittanica. While it's true that people use the computer to search for information and that is different than before there were computers, it wasn't a marketing campaign that got people to use computers or Google.
I agree that SEO is a game changer and that local marketers must take advantage of it. So, we end up agreeing after all because once local marketers have a keen understanding of human behavior their marketing becomes a lot easier.
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Great post Tim. I always appreciate your take on sales as a advertising rep because this was a very difficult thing for me to grasp as a new sales manager. Now as a director I have spent a lot of money on advertising that had little to no return and understand why we were not advertising on the side of buses, shopping carts, etc... The trick is to advertise when the customer needs it and where they are likely to see it. I think that supports Tim's argument.
As for Coke in the morning I'm surprised they are not pushing that still. There are a lot of non-coffee drinkers out there that want their caffeine fix. I can think of a lot of days where I have had a 7AM Coke or RockStar to "get me going for the day", a habit I probably picked up in high school.
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