Is marketing simply teaching new dogs old tricks?

Can anyone tell me if they’ve come across any new earth-shattering insight about marketing that hasn’t been discovered already?

Marketing is all about new ideas

The impression of marketing given in social media is that it is a profession that is forever in a state of flux and that if you don’t keep up with change you are doomed to failure.Well there’s an old trick for a start! Fear sells – terrify your prospect that their future career or business is in jeopardy if they don’t take on your ideas.The principles of marketing are enduring and are unlikely to change. This is because they combine into a particular managerial world view. What Thomas Kuhn called a Paradigm.

Marketing is all about old ideas

Now the thing about paradigms is they create acolytes. Acolytes are people who are introduced to the mantras and creed of a world view and fall in love with the paradigm because it makes sense of the world in a way that was hidden to them before. The paradigm is so helpful that the acolytes then evangelise about it (tell every and anybody that it is ‘the way’ and the only way and all other ways are wrong.

People new to marketing are initiated into the rites of the marketing profession, its principles methods and language. Many of these people are at the early stage of their commercial career others may come to marketing mid-career whilst studying an MBA or similar.

Seasoned business professionals are rarely taught anything fundamentally new about marketing – they actually know it all and practice it’s principles instinctively.

Of course other paradigms come along to replace prevailing ones but only when a completely new way of seeing things is put forward. Views such as Service Dominant Logic might be classed as one and the ideas published in the area of Critical Marketing. Everything else I read about concerning everyday marketing management and problem solving sits within the conventional marketing paradigm.

So whilst I read a lot about new techniques such as the application of social media in marketing activities, and trends such as the importance of story telling for brands,  because I’ve been around a while I don’t actually see anything truly new in terms of everyday marketing management thinking. Let’s check a few of the marketing stalwarts out.

Marketing’s old ideas

  • Customers buy benefits not features
  • There is a difference between need and want
  • Brands are a promise of value
  • Customer segmentation and targeting is an effective use of scarce resources
  • Make the marketing mix relevant to the target customer
  • Firms need meaningful differentiation to compete
  • Customer centricity should be your focus
  • Keep an eye on your competitors
  • Plan what you by following the structure; where are we? where do we want to be? set out how to get there, and measure your effectiveness
  • Don’t give profit away
  • Have a dialogue with your customers
  • Changing the logo is not changing the brand
  • Some customer aren’t worth doing business with

Have I got this wrong? Are there any new principles you would teach new dogs?

10 customer value essentials for creating effective value propositions

Create effective value propositions by deeply understanding the nature of customer value

  1. Always think ‘it depends’
  2. Put value at the heart of every marketing management conversation you have
  3. Make value the touchstone of every single marketing decision and action
  4. Cover all the value bases
  5. Don’t confuse Values with Value
  6. Ensure everyone in the team has the same take on value
  7. Avoid customer worship
  8. Deeply understand value in use and value co-creation
  9. Remember you are always aiming at moving target
  10. Become an expert in art and science of Value-ology

1. Always think ‘it depends’

How much do you think this car is worth?

vw-beetle-rusty

I bet one of the first things you would say is ‘well it depends’ and by saying that you are acknowledging something crucial and fundamental about this thing we call ‘customer value’. Saying ‘it depends’ means we recognise that value is unique to the person who decides the value and the circumstances in which they are making the decision.

So in the case of the rusty old Volkswagen Beetle like this one the scrapyard dealer might be thinking of the monetary value of the scrap metal, the VW owner who needs a scarce part might be thinking how their break down problem has been solved now that s/he has found a rare engine part, the car renovator might be thinking about how perfect the car shell is for their next custom car project, the grandson tracing his family history might over the moon that he has finally found his grandfather’s car that he drove around Europe in the early sixties and met the woman who was to become his wife. What we ‘get’ for our money is so much more than just the thing itself.

2.Put value at the heart of every marketing conversation you have

As a cornerstone of business activity in general and marketing management in particular understanding value is the primary commercial concern. Marketing shorthand for value is typically ‘the benefit’ or ‘the solution’. It is so fundamental that almost everybody in a firm from the tea boy to the CEO has a view about what the customer values. If you don’t deeply understand value as a concept and what value in particular means to your customers your chances of success are greatly impaired.

3.Make value the touchstone of every marketing decision and action 

Understanding value seems so obvious it hardly warrants further comment and so marketers often give more time and attention to marketing implementation rather than making sure actions are aligned to fundamental value drivers.  Marketers  can easily end up focussing on the interesting rather than the important. To paraphrase Peter Senge when they do this marketers run the risk of chasing the latest fads thinking they are being proactive when all they are doing is reacting and overlooking fundamentals.

4. Cover all the value bases

Over the years it’s become clear that the idea of value is a multi-dimensional constantly moving target. It is unique to each and every customer, it is relative to the competition and it is a weird mix of the monetary, functional and meaningful. For that reason it’s probably one of the most challenging topics in marketing.

Key thought leaders who have produced value definitions and frameworks include:

  • Park, Jawarski, and MacInnis (1986) from function to experience
  • Valerie Zeithaml (1988) from give to get
  • Robert Woodruff (1997) from product attributes to satisfaction
  • Sheth Newman and Gross (1991) from function to social
  • Morris Holbrook (1998) from efficiency to spirituality
  • Ulaga (2003) from attentiveness to expertise
  • Khalifa(2004) from trade off to means ends
  • Brock and Colgate (2007) from money to symbols

Value is a complex combination of different things.

Some are more important in b2c and others more relevant to b2b. The important thing to note is that it is a blend of these things, unique to each customer and each market situation. This means value is never fixed and constant.

Key value elements include:

  • Economic value – what is the asking price or utility of something
  • Perceived value – what you think something is worth
  • Relationship value – how much a long term and close trading worth
  • Experiential value – how interacting with your brand feels
  • Symbolic value – what something means
  • Knowledgable value – how helpful something is in improving life and business in general

These different facets of value engage the purchaser in both rational and emotional decision making simultaneously. The big debate in b2b is just how much purchases depend on objective financial factors and how much on subjective factors such as relational warmth. Is clarifying what value actually is on your marketing agenda.

5. Don’t confuse Values with Value

 There is a lot of contemporary talk in professional marketing circles about moving from attribute to values based marketing. The idea here is that if you tap into the psyche of customer by understanding their deeply held beliefs and life goals this is more relevant persuasive and influential than addressing economic, functional and perceived value. We claim that choosing either attributes or values presents a false dichotomy. In practice it’s not really the case of choosing either attribute or values based marketing. Also in a b2b context there might be a very clear need for specific technical expertise, or financial attributes that are deemed of immediate value rather than a more values based value view of purchase drivers such as loyalty or trust.

Value and values are of course closely related. The distinction needs to be made clear nevertheless. Frequently people hear the word value being mentioned and proceed to talk about their company values. Value is what is the customer gets (which might include resonating with personal values). Values on the other hand are the profound beliefs that people hold which guide how they act in the world. Value and values are not the same thing. Is distinguishing value and values on your marketing agenda?

6. Ensure everyone in the team has the same take on value

One of the most frequent problems we hear about when working with organisations is that there is a problem with communications. People don’t keep their colleagues informed, there is a lack of feedback or information is simply not shared.

These things obviously create communication challenges however there is something much more profound about how we communicate that is often overlooked. That thing is declaring your assumptions or explaining where you are coming from. We take our assumptions for granted and so we often don’t bother talking about them or revealing them to others. People tend to rush into selling and enthusing about their ideas and proposals without establishing a baseline of understanding. They assume they are talking about the same thing when often they are not. One person may be talking about economic value and the other about symbolic value; another may be referring to value and the other to values. Always be clear about ‘what’ you are talking about. Is understanding different internal value perspectives on your marketing agenda?

7. Avoid customer worship

The establishment of marketing philosophy and principles in the management psyche is probably one of the most successful selling jobs ever.

Marketing speak is everywhere, people who don’t even work in marketing talk of brands, positions, segments, targets, benefits, competition and differentiation. Where there is talk of customers instead of patients, where there is talk of customers rather than students, where there is talk of customers not citizens that’s marketing talking. Philip Kotler crystalised the idea that marketing touches every aspect of life from business, hospitals, schools and churches in his 1972 article The Generic Concept of Marketing. We can call this the marketisation of everything and the assumption that this is obviously a good thing, but is it?
Customer centricity is a key marketing idea.

Customer centricity is  epitomised by the idea that the ‘the customer is king’. If you are not careful this can lead to customer worship and the potential of going out of business. I worked many years in the gambling industry. When we researched players they always said they wanted  ‘the jackpot’ every time they played a slot machine. Did we give the customer what they wanted? Of course not! Value has to be created for all parties for the deal to work. The players were given a win chance and a run for their money and the slot operator got a profit per game played. Esteemed marketing expert Evert Gummesson recently called the pursuit of customer centricity a wild goose chase. Getting the balance right between the value the customer wants and the value the supplier needs is called  value appropriation.

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8. Deeply understand value in use and value co-creation.

How many people in your firm actually know what co-creation of value means?

Do they really understand  the principles of The Service Dominant Logic of Marketing proposed by Robert Vargo and Stephen Lusch where the notion of co-creation was first presented?Many marketers use the term co-creation to mean working with the customer to develop new products and services. For sure an element of joint or co-creation takes place. Often this is called co-production too.

When talking co-creation of value  Vargo and Lusch mean something else entirely. They challenge the very basis modern marketing management by claiming that the whole profession is built on focussing on just one, very particular,  idea that philosopher and economist Adam Smith had about value. This idea was the exchange of value which he set out in his book Wealth of Nations. In this treatise Smith made the case that for nations to grow their wealth in the global economy they needed to add value by the production of products which is then exchanged for money by exporting to international markets. The idea of value exchange has been the basis of marketing ever since.

Adam Smith was making a specific economic case in relation to exporting; as a philosopher Smith also understood that value was only really co-created at the point of consumption. So we have value in use rather than value in exchange.  Their point is subtle and important.

The claim that value can only ever be created in the moment of use means that value creation is reciprocal – in other words co-created for the supplier and the customer at the same time not passed from one to the other. Value therefore cannot be ‘added into’ anything and embedded by the supplier prior to purchase. Thinking about value in use ensures that firms don’t run away with a technological or product perspective and always focus on the value the customer will derive when the solution that is offered is used. Co-creation is not really about co-development.

9. Remember you are always aiming at moving target

Can we ever really know what the customer wants, needs or values at any point in time? Sure we can have broad idea of the sorts of problems and aspirations customers have and sure we can propose generic solutions to satisfy what the customer might be seeking. But can we actually know in advance what is driving a particular customer purchase? The context of every purchase is unique every time. Only the customer can decide what is relevant to their situation and so this means that businesses can only propose value. What this means is that being continuously tuned into what is relevant to your customers is vital. This is what makes face to face interactions in b2b marketing so important. Without relevance your marketing efforts run this risk of missing the target. Is solution and value proposition development for value in context on your marketing agenda?

10. Create, deliver and communicate differentiated customer value with Value-ology

If you want to learn more about the essential topic of customer value in business to business and more about methods of implementation and capabilities to make things happen discover further ideas and insights in our forthcoming book Value-ology – Aligning sales and marketing to shape and deliver profitable customer value propositions due for release by Palgrave Macmillan January  2017

Interaction, interdependence and relationships : creating small business customer value. 


Last week myself and some colleagues from Sheffield Business School attended the IMP Conference on business to business marketing at Poznan University of Economics in Poland.

For over forty years the ideas of IMP research and thinking have influenced business study. In particular the IMP perspective explains how business works from a network perspective rather than a strategic management perspective. Central to this view is that business is all about interactions between different companies (and their people), interdependence between various businesses that bring products and services to customers and relationships that endure over the long term rather than one off transactions. When such networks work well value is created for all participants in the network 

So does any of this stuff really really happen in the practice of even the smallest of businesses I asked myself. To find an answer I looked at my son Alex’s Interior Design and Development business AJ Interior Developers Plymouth UK.

I was inspired to think about his business after viewing his Instagram pages and thinking how social media has shaped customer interactions and relationship building. It also helps with an idea from Service Dominant Logic which states that people like Alex can only propose the value of their service. The customer creates value afterwards through the use of the new home spaces he creates. The use of pictures of not only his finished work but work in progress too conveys to customers his skill and professionalism before they have experienced it for themselves. Instagram helps overcome the problem of service intangibility and invisibility.

His use of a Short Instagram video adds a different dimension to interaction as well because it brings some personality into play and stimulates the imagination of the customer to the possibilities for their own home.

In order for the customer to have a smart new home space Alex is plugged into a whole network of other people and businesses. Kitchen design companies like Wickes and Homebase, a referral network, specialist co-workers like gas engineers and building regulations, parts and raw material suppliers and so on. Everyone in the network is interdependent on the others. The situation is a lot more sophisticated than just ‘supplier – customer’.

The customer value that is created encompasses all of the dimensions of value that we talk about in our new book Value-ology. There is economic value regarding the price of the new space, perceived value regarding how the customer sees the new space such as their attitude to colours and fittings, then there is relational value regarding the service given by Alex and then there is experiential value that relates to how the customer feels about the installation experience and eventually living in and using the newly created space. 

So does the sophisticated thinking of IMP academics work in practice? For sure and that should hardly be surprising as the academics who form the IMP community are deeply interested in the everyday world of business and not just speculative theorising. Without real world business there would be no IMP.  For me Alex’s business is a classic demonstration of the IMP principals that underpin value creation for sure.

TEF Times: 2nd Reading of the HE Bill

Academic Irregularities

In July 2016 we are contemplating a new period of instability for universities in the UK, and with the passing of the 2nd reading of HE Bill, things could quickly get a lot worse. The EU Referendum result has already created uncertainty regarding the future of much of our research funding. It seems there is much uncertainty at the top of UKHE: Universities UK (‘the definitive voice of UK universities’) has asked for the government to press the pause button on HE reform , Meanwhile, the vice-chancellors of Nottingham Trent and Exeter Universities argue for forging ahead with reform and the implementation of the Teaching Excellence Framework (TEF).

Maddalaine Ansell, CEO of the University Alliance, appears to agree with the latter in her prediction that the HE Bill will take the sector to calmer waters.  Ansell’s premise is that there will be a benefit from having all legislation relating…

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Bureaucracy kills customer value creation 

Do you have energy vampires in your organisation?

When I read this recent article from the HBR blog How to stop people who bring things down with bureaucracy I couldn’t believe how it totally nailed many of the more motivation sapping experiences of academic and commercial life.

Author James Allen describes ‘energy vampires’ who create diversionary none value add activities.

These activities however well intentioned adversely diminish the energy and action that should be devoted to the creation of customer value.

Of course most organisations need some systems and processes to function. Sociologist Max Weber pointed this out years ago. The problem occurs when bureaucracy becomes self serving and self perpetuating. Bureacracy can be characterised by mindless demands for information, defensive records of decisions and actions – ‘just in case’ something bad happens, a form for this a form for that, multiple sign off forms, lots of data creation and little insight and information agility.

One of foremost writers and researchers on Bureacracy is David Graeber author of The Utopia of Rules. He recently wrote an article for Times Higher titled Why Won’t Academics Break Their Paper Chains.

I would recommend any business person to read his work to see what can happen in large organisations when the value creating imperative of the business is smothered by bureaucracy.

One on the central themes in our forthcoming book Value:ology is about the value creating and proposing capability of people in your company. With Co-authors Simon Kelly of Sheffield Business School and Stacey Danheiser of Shake Marketing we emphasise that without a dedicated focus on value creating activity you will waste time, money and energy on irrelevancies.

So can you spot the tell tale sales of value smothering in your business? James Allen gives a clue when he says watch out for people that:

‘….fire off lots of missives that force your people to stop serving the customer and instead respond to yet another information request’

 

Creating brand love means being tough on value 

Brand Love
One of the big ideas in brand management is the creation of brand love.  This is where the solutions you sell and the customer relationships and experiences you create result in customers who are passionate and committed to your brand.

But have you stopped to really think through what generates this passion and commitment in the first place?

The only way customers will love your brand is if it delivers value in a way that matters to them. True value resonates with your customers. This means you need to be tough on value in your organisation to prevent it being treated as ‘taken for granted’ or ‘glossy rhetoric’.

Adding value and creating customer value are often snappy sound bites that are very easy for people to buy into.When this happens you could have a serious problem when it comes to establishing what value means for your business. Ask yourself honestly; does everyone in the organisation have an aligned view on what are people talking about when they talk about value in general and customer value in particular?

Get tough on value conversations in your organisation by doing three things.

  • Don’t confuse it with satisfaction because that is only about after the purchase. It says a lot about wants and little about real needs.
  • Don’t confuse it with quality because that is about technical standards.
  • Don’t confuse it with your values because they are about you and not the customer.

Are you sure your team knows the difference?

Organization psychologist Kurt Lewin said there is nothing more practical than a good theory. He said this to make managers realise that an assumption has a direct influence on practice. Mistaken assumptions about ‘what’ value is results in irrelevant marketing implementation.

You can think of defining value in your business as just as important as NASA getting the trajectory calculations right for a space exploration vehicle such as the Mars Curiosity Rover. Even a small miscalculation on launch could have resulted in Curiosity missing big the red planet by thousands of miles.

Let’s say you assume that the primary benefit your customer is seeking is the best price. This might seem reasonable because the customer always mentions the price in conversations. Acting on this assumption could lead you to being way off target. Deeper understanding of the customer through careful unpacking of what is going on in their business world reveals that they value your detailed expertise and network of suppliers which means the relationship they have with you helps them compete in their market more effectively. The real value is in the supplier relationship not in the price.

If you don’t ask tough questions about what people mean by value then there is a very real risk your plans, product developments and campaigns will be off target. Worse still you’ll get locked into a cycle of repetitive problem solving as one thing after another is tried in the elusive hunt for customer value.

Barbara Caroll and Aaron Ahuvia in their article Some antecedents and outcomes of brand love – Market Lett (2006) 17: 79–89 define  brand love as “the degree of passionate emotional attachment that a person has for a particular trade name.”. A definition such as this is helpful in focusing attention key brand love attributes.

The challenge for the professional marketer of course lies in creating specific actions that predispose the customer to fall  and stay in love with your brand. It’s issues like this that are at the heart of the work my publishing colleagues Simon Kelly of Sheffield Business School UK and Stacey Danheiser of Shake Marketing USA address when they talk of the need to create resonant value propositions and ensure that sales and marketing activities are aligned.

Brand love needs a bit of tough love too.

If you are interested in the academic research into brand love then the following might be of interest:

Fournier, Susan (1998), “Consumers and Their Brands: Developing Relationship Theory in Consumer Research,” Journal of Consumer Research, 24 (4), 343–73.

Albert, Noel, Dwight Merunka, and Pierre Valette-Florence (2008), “When Consumers Love Their Brands: Exploring the Concept and its Dimensions,” Journal of Business Research, 61 (10), 1062–75

 

 

UK Politics not governed by advertising standards


Given the controversy of claim and counterclaim during the UK referendum on membership of the EU it’s interesting to see the difference between selling products and services and selling political ideas.

Aldi recently fell foul of the Advertising Standards Authority on an issue about claims they made about potential customer savings. 

However:

The Advertising standards authority state in their codex under section 7.1 that.

Claims in marketing communications, whenever published or distributed, whose principal function is to influence voters in a local, regional, national or international election or referendum are exempt from the Code.

Regardless of any ruling like 7.1 above that might be modified the ASA states its mission is to provide marketing communication rules that mean:

advertising must be responsible, must not mislead, or offend 

What do you make of that?

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