The more I talk to people about consumer decision-making and the potential for buyer-centric services, the more I hear what appears to be a new conventional wisdom: that consumers don’t know what they want until marketers tell them.

This was one of the pushbacks I got from my talk at Nottingham Business School. Like so much else that’s said about the so-called ‘irrationality’ of consumer decision-making, it’s a) more complicated than the simplistic slogan and b) fuelled to a large degree by marketers’ own self-serving propaganda.

So let’s look a little closer.

First, there is the whole debate about the role of conscious and unconscious processes in decision-making. I’ve touched on that elsewhere so won’t return to it here. So what else is there?

Innovation

Well, there is one important area where it is absolutely true that consumers don’t what they want until marketers tell them: the arena of innovation where the consumer doesn’t know what’s possible.

For example, he is ignorant of technological or other capabilities and doesn’t know that it’s possible to fly through the air in a steel tube, or talk to a person on the other side of the world in real time, so he thinks he has to go by boat or write a letter.

This is probably the most important area where the line ‘consumers don’t know what they want until marketers tell them’ is absolutely true. It’s the background to Henry Ford’s oft-quoted remark that if he had asked consumers what they wanted, they wouldn’t have said a motor car; they would have said a faster horse. It’s where innovators and inventors come along and say ‘you never knew this before, but now it’s possible to do X!’

But we also have to keep it in perspective. Time and time again, studies of new product launches show that the vast majority of so-called ‘new’ products are actually new versions of old products – an added tweak or feature, a variant of some sort. A tiny minority of supposedly new products – around 1-2% – are actually new to the world. So while it’s true that consumers don’t know that they want innovations till they see them, this truth actually only accounts for a tiny proportion of total marketing activity.

Clever marketing?

So, apart from this tiny proportion, where else does the adage hold true? Well, there are number of areas where it seems like it holds true, but probably doesn’t. Here are three examples:

• The consumer doesn’t know what’s available. In most markets, especially where consumers are relative novices, they only have a cursory knowledge of what’s available on the market. Because the costs of searching for information about these different choices is so high they often don’t bother. In these circumstances, they become at least partially reliant on marketers telling them what’s available – and when they come across what they want, they go out and buy.

Viewed from the point of view of the marketer, this looks like the consumers waiting for the marketer to tell them what they want, but actually it’s nothing of the sort. Consumers’ apparent passivity is a by-product of the high costs of searching, sifting, comparing what’s available. The job of buyer-centric services is to help consumers know what’s available, thereby reducing their dependency on this sort of spoon-feeding.

• The consumer doesn’t know what’s best In some cases, even where the consumer is aware of a wide range of alternatives, he still doesn’t know which option to go for: he needs advice. Again, this is especially true when the consumer is a relative novice and where the product or service is relatively unfamiliar or complex.

What the consumer really needs here is trustworthy advice. But usually that’s not available at an affordable price, so the consumer has to take a different approach. Historically, one of the lowest risk routes available was to opt for the most reputable, most famous supplier i.e. the one that did the most advertising.

Again, the ‘evidence’ seems to show that it is the marketer telling consumers want they want, but actually this evidence is just a manifestation of a deeper issue – the high costs of getting trustworthy advice.

The job of buyer-centric services is to provide the trustworthy advice (see Problem Solving Communities) thereby reducing dependentce on these short-cuts.

• Impulse purchasing, where the consumer is titillated by the marketer’s marketing I remember once, I went out and the weather turned nasty. I was on my way home feeling cold, wet, hungry and miserable when I saw an ad for Heinz Tomato Soup. I looked at the ad and thought ‘that’s just what I want to warm and comfort me’ – and bought a tin there and then. I didn’t know that I wanted a bowl of hot tomato soup until the ad ‘told’ me and triggered the desire.

Marketing activities such as these crystallise desires by stimulating consumers’ senses. This is the secret behind impulse purchases, and it will remain a feature of life as long as human beings have impulses.

But again, if you look at purchasing as a whole – especially in terms of amounts of money spent – most purchases aren’t impulse, they are considered to some degree or other. And on many occasions, the consumer defaults to an impulse approach because the cost or complexity of making a better, more informed decision is so high.

So if we look at the above four scenarios, we discover that only one of them really holds true: the case of ‘newness’ where much of the value that’s being provided comes from the very fact that nobody has thought of this before. The other three areas where it seems that consumers need to be told what they want are actually symptoms of the deeper problem: that in today’s commercial environment, the costs of decision-making are so high that most people opt for short-cuts, because otherwise they would go mad.

When we do know what we want

The other side of the coin is that there are also a number of cases where it’s palpably not true that consumers need to be told what they want. In every market you can think of, there is always a spectrum of consumers ranging from the complete novice who doesn’t even know what questions to ask, to the absolute connoisseur. In other words, market by market, category by category, product by product, situation by situation we are all of us on some sort of learning curve.

The more experienced and knowledgeable we become, the more we know what we want and the less helpful marketers trying to tell us otherwise becomes. In fact, at this end of the spectrum the boot moves to the other foot, where marketers need to engage with these consumers because they know what they want better than the marketers! This is the impetus behind the growing interest in ‘co-creation’.

A common half way house here is where people ‘sort of’ know what they want, but find it hard to articulate and express.

The really big area is in the middle: the many cases where consumers currently rely on marketers telling them what they want because, the way markets currently work, the sheer hassle of doing anything different is simply much too much.

The buyer-centric opportunity

Now, if we look through this list, we discover the potential for a whole range of different buyer-centric services. For example:

• Where the consumer doesn’t know what’s available, making it easier and quicker for the consumer to find out (by for example, using search, peer-to-peer, buyer’s guide and other mechanisms)
• Where the consumer defaults to heuristics for lack of good advice – here the buyer-centric service can make the consumer less reliant on the marketer by providing better advice via peer reviews, expert reviews, problem solving communities and the like.
• Where the consumer needs help in articulating exactly what they want/need. Looking forward, this is probably one of the richest areas of buyer-centric service, and it’s made possible by consumer-to-consumer information sharing: ‘I might not have been on this journey before, but many others have – and I can pick their brains to help me work out what’s right, and what’s not right, for me’.
• Where the consumer wants to specify what they want but can’t get. This is the arena of specialist ‘request for proposal’ services which reverse the flow and which help consumers to talk to marketers and say ‘actually, this what I want’.

So what’s our net conclusion?

• First, there is a role for the marketer ‘telling consumers what they want’. But in reality, it’s actually quite restricted – mostly to the arena of innovation.
• Second and much more important, there is a massive unmet need for services that help consumers work out and articulate what they want for themselves.

Most marketers’ claims about consumers needing to be told what they want do not relate to the passivity or lack of imagination of consumers – they relate to the costs consumers incur when they go to market; costs which are, for the most part, created by marketers themselves; costs which make navigation, choice etc expensive and difficult and which prompt consumers to opt, instead, for whatever marketers put in front of them.

Alan Mitchell

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AlanMitchell Advertising, Branding, Buyer centric services, Marketing, The Persuasion Paradigm, Uncategorized

It’s always nice to get supportive comments so Sivaraman Swaminathan’s comment that ‘your model definitely makes sense and is worth pursuing’ is welcome. However another one of his comments – that “we will have to forget the word advertising in this eco-system” – sets alarm bells ringing: I am not so sure.

Let’s start with the assumption that we are indeed moving away from yesterday’s persuasion paradigm towards a new, personal decision making paradigm (Beyond the persuasion paradigm). Does that mean ‘the death of’ or even the decline of traditional advertising?

I don’t think so. To see why not, we need to disentangle different elements of the blanket term ‘advertising’: like the air we breathe, it’s actually an amalgam of many different elements.

The drivers of advertising

We tend to think of advertising in terms of seller-centric huff-puffery where companies narcissistically interrupt what we happen to be doing to shout “Look at me! Aren’t I wonderful!” There is a lot of this sort of advertising around. But it is not the complete picture.

Some advertising is actually used by ‘consumers’ as an input into their decision-making processes. Yes, most advertising is just self-interested hustle, but when companies bring new products to market (for example), their ads do actually announce new value opportunities to a sometimes eager audience. That’s why much of the research into so-called advertising ‘effectiveness’ finds that ads which announce ‘new news’ tend to generate bigger, better responses than ads which simply continue tired ‘brand wars’. To a certain degree (and it is only a certain degree) these ads are useful to their recipients.

Advertising generates a ‘win’ for consumers in another important way. This time, the benefits have nothing to do with the actual content of any particular ad but its economics – the fact that it subsidises the provision of editorial content. Yes, interruption advertising can be incredibly irritating, but still many people are willing to put up with these annoyances in return for free access to content they want. This may change at the edges, but the model as a whole is quite robust. It is unlikely to disappear soon.

There are other detailed niches of advertising which also generate consumer value. In magazines like Vogue, the ads are effectively part of the editorial content: people buy the magazine to look at the style suggestions being made by the ads as well as to read the articles. In the case of luxury goods, the ad provides a large part of the product’s value: the symbolic value that users so crave: ‘Look how rich I am! Look how stylish I am!’ We may sneer at such foibles, but I suspect they are a human universal and are therefore here to stay.

In each of these cases, the fact that there is a consumer benefit as well as a seller benefit means that these forms of advertising are probably here to stay.

In addition, there are other benefits for sellers which arise whether they benefit consumers or not.

Advertising agencies like to sell dreams of strong advertising effects to corporate clients: ‘if you use our advertising, it will press buttons in consumers hearts and minds to make them do exactly what you want them to do’. This sales pitch works time and time again, not because it has any foundation in fact but because clients desperately want to hear it. Hope springs eternal and opens boardroom purses, thereby providing an ongoing impetus for the advertising industry (even if, nine times out of ten, the client ends up being disappointed).

There is, however, another way in which advertising really does ‘work’. This is a ‘weak’ influence, but an important influence nevertheless. Human minds are bit like broadband internet: they are ‘always on’, forever taking information in from their environments, the vast majority of which goes in under the radar screen of consciousness. This is how, as organisms vulnerable to danger, we scan and monitor our environments to stay alive.

Ads have become a part of our environment. We ‘notice’ them just as we notice the sound of an aeroplane, the temperature of the room, the smell of the coffee – we just take the information in as part of the routine of every day life.

The effect of this advertising is that when we see the product or brand concerned we ‘recognise’ it. This means two things. First, (by definition) we can only remember products that we recognise – and memories do influence purchases. Second, we are more likely to positively choose a product that we recognise than one we don’t. It’s more familiar, safer, less risky.

This sort of advertising doesn’t actually ‘persuade’ us to do anything and its actual effect on purchasing decisions is quite small. But it is real. Brand and product ‘fame’ creates a competitive advantage for products that are advertised over products that are not advertised, forcing advertisers into advertising arms races – whether they like it or not.

This means that regardless of how much it costs, how wasteful it is, how annoying it is to consumers, and how little persuasive effect it really has, selling companies will probably feel compelled to advertise long in to the future.

Advertising channels

All of the above comments relate to ‘advertising’ in general – not to any particular media channel or industrial category. Once we drill down a level to different media channels and industry categories, a whole series of specific issues kick in, with highly specific implications for each channel.

So, for example, traditional classified advertising for jobs and property can be far more efficiently displayed and far more efficiently accessed by users on the Net. So, far from this form of advertising going into decline, it is likely to grow and expand in the more supportive online environment. This may mean an earthquake for traditional media vehicles which rely on classified ads: even a 15-20% decline in classified ad revenues spells real profitability problems for many trade and professional magazines and many local newspapers. This is a real crisis for the businesses involved. But it is driven by a migration of advertising, not its decline.

The same is true for direct marketing. There are some purposes for which direct mail to physical postal addresses is both efficient and effective from the seller’s point of view, but in many cases data-driven ‘personalised’ online communication is both cheaper and generates a higher response rate. Again: a migration of advertising, not a decline.

The rise of bottom-up demand signalling models – ‘here I am, this is what I want to buy right now’ – may well lead to a diversion of some advertising funds from mass display to personalised sense-and-respond mechanisms in some advertising sectors such as motors or financial services. However, volume-wise, this development is likely to affect a relatively small proportion of total advertising in the short to medium-term future.

Meanwhile, in display arenas such as TV and national newspapers, the twin forces of the editorial subsidy and the inter-advertiser ‘weak force’ arms race means that total advertising spends are unlikely to decline by a huge amount, if at all.

One key factor here is that if a major advertising sector such as motor, financial services, retail or consumer goods decides to shift its spend elsewhere, there are plenty of other industry verticals who would just love to advertise in these vehicles if only they could afford to do so. So we are more likely to see a continuous shuffling of the revenue/advertiser pack than a precipitous cliff-face decline in these media channels.

Meanwhile, all the pro-advertising forces described above – the win-wins behind ‘new news’, the editorial subsidy, the niche markets, the unavoidable ‘weak’ effects of brand fame – apply as much to the Net as to other media. So yes, it is inevitable that the Net is going to become a major advertising vehicle.

Chalk and cheese

What has all this got to do with the rise of personal information management and decision making services? The answer is ‘very little’. The forces that are keeping advertising afloat and driving large parts of it to the Net have actually got very little to do with the forces that are driving the rise of personal information management services. And where they do overlap they are likely to be more complementary than opposing.

For example, as services which help individuals make better decisions grow and mature, many of them will become significant advertising channels in their own right. Take Edmunds.com. It is now the most influential source of buying information for car buyers in the US, and because it provides such useful information to car buyers it attracts huge audiences. These audiences make it a valuable advertising vehicle for car sellers, which is how and why it makes its money – by selling advertising. From the advertiser point of view, it is just another ‘channel’.

So here’s the bottom line. The development of new personal information management services is unlikely either to be helped by a decline in traditional advertising or hindered by its continued healthy growth. ‘Person centric service’ is a new growth industry in its own right.

Yes there are overlaps and these overlaps will grow, but creating the new is not the same as demolishing the old. And the really big, exhilarating opportunity is to create the new.

Alan Mitchell

5 October 2007

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AlanMitchell Advertising, Branding Advertising

When I was at school I remember learning all about ‘the scramble for Africa’, a period when imperialist contenders such as the UK, France, Germany, Belgium, Portugal and Spain raced each other for ownership and control of large swathes of territory.

Today, corporate imperialism is much more fashionable, as corporations fight each other for ownership and control of lucrative markets.

The business press loves such ‘brand wars’. But as with the imperialist expeditions of the days of yore, it’s easy to forget they are simply battles for access to, and control over, commercial territory. In brand wars, ‘the customer’ is a just another asset – a revenue stream – to be fought over. Just like a piece of real estate. Brand wars have nothing to do with what marketing and brands are supposed to be about: identifying and meeting needs, serving customers etc. What the customer thinks or needs has precious little to do with it.

The latest farcical spectacle of a brand war is now unfolding in the UK, with Virgin/NTL and Sky squabbling over who provides who with what programmes at what price. The real issue at stake: ‘market share’ – or who gets most in a frantic territorial carve up.

Yesterday’s imperial armies had their flags: symbols of power, a way of asserting control. Today’s corporations have their brands. Military armies planted their flag in physical territories to signal dominance and control; corporations try to plant their brand flags in markets for the same purpose. We like to think we’ve made enormous progress. But have we, really?

Alan Mitchell

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AlanMitchell Branding Branding

The other day I had the privilege of listening to a lecture by Kevin Roberts, CEO of Saatchi & Saatchi.

Roberts linked a series of propositions to create an argument that goes like this.

1) “Brands were invented for one reason only: to charge a premium; a higher price, a higher margin.”

2) Creating an emotional connection with the consumer is “bigger and better than more quality, more value. These table stakes aren’t enough”

3) 85% of human decisions are made emotionally, not rationally.

4) “Great communication works inherently at an emotional level”

5) “The only point of advertising is to drive people to do something”.

6) So the role of marketer is to do great communication that works at an emotional level, to create a ‘lovemark’ which “inspires loyalty beyond reason. That is where the money is. Beyond price. Beyond benefit. Beyond attribute. Beyond logo.”

In other words, the role of the marketer is to ‘drive’ people to ‘love’ you so much that they no longer use their reason and hand over loads more cash to you – more than if they still had the use of their reason. And you do this by emotional advertising.

Never mind the fact that each one of these six propositions is flawed in its own right. Look at the instrumental, self-seeking motives. Look at the attitudes it displays towards people – ‘the consumer’.

Kevin Roberts’ arguments sum up everything that is wrong with marketing today.

Alan Mitchell

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AlanMitchell Advertising, Branding, Marketing

With the launch of M&S’s ‘Look behind the Label’ campaign,
we are going to see increased competition among the supermarkets to
open up the the can of worms that is global supply-chains…

Fairtrade jumpers is a lovely thought…and a good marketing ploy…

The decision to ban Indian leather on welfare grounds is equally smart…

But what about Chinese leather?  What about the environmental impact of
unregulated dying factories? What about biodiversity impacts?  What
about carbon emissions?

A single-brand approach (organic/fairtrade/GM-free/low salt) is
fine…but as the number and scope of these ‘single issue’ brands
proliferates, so consumers will start to ask deeper questions of
value-chain accountability.  Ultimately, it’s ethical transparency of
the underlying data that matters – not the brands on the surface…

The real challenge is to give me access to the real information – and the tools to access it.

M&S deserves respect for opening the can of worms, but it does not remotely compare to what ROMP has done, by adopting MyString right through the value-chain…

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timkitchin Branding

I see several interwoven agendas caused by the interface between marketing and
technology that all move us towards ‘user-accountability’.

1. The advent of decision-based web-dialogue enabling users to sense needs and
co-ordinate responses.  Companies no longer have to predict or pre-build product on the basis of guesswork; they can build what you say you want…and infer what you might need next.

2. The ability to share the rich information currently within value-chains in
user-defined value-specifications creates the possibility of genuine brand
accountability to end users.

3. The ability to physically track and trace product, or people (though RFID) offers
huge value opportunities – if shared with individual users.

Just as media convergence enables you to bring videos, music, pictures and books into a
single storage ‘pot’, so RFID will enable the same possibilities with physical
assets.

4. Finally, the advent of social software – enables people not just to connect their
social networks (cf. Linked-in), but to generate incremental value through
those networks (cf. del.icio.us, flickr, technorati).

This newfound ability to undertake personal asset management will greatly
simplify people’s lives and create new opportunities for value ‘origination’ – unleashing
the so-called DIY era, typified by personal publishing and the iPod generation.

Once individuals are ‘in charge’ of their total asset portfolio:  physical, information, relationship, and
reputational assets, they can begin connect their own ‘internalities’ of their
values, to the ‘externalities’ of global production systems…

This ability
to connect the user’s richly-informed demand-chain to corporates’ flexible supply-chain
suddenly makes woolly notions of win:win economics and corporate social
responsibility, not just practical, but actually profitable.

“I want blue,
nike-brand T-shirts made from organic cotton, produced in china at labour rates
above national average…and it want them by next Tuesday…overprinted with images
of my new pet rabbit…and shared with my three best friends – in different locations.”

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timkitchin Branding

Emotion is a resource marketers use to drive sales of their products.

By adding a layer of ‘emotional added value’ to the functional benefits offered by their products and services, marketers hope to persuade consumers to buy more, more regularly, at a higher price.

Marketers see human beings’ emotions as a potential resource for the firm – as ‘triggers’ to be pulled and ‘buttons’ to be pressed to ‘build loyalty’ to their brands – not as a potential source of value to the people feeling these emotions.

Marketers’ actual ability to corral and deploy peoples’ emotions in favour of their brands has never been as strong as their ability to use information or grab attention. So we’re likely to see less change here.

But change there will be. The attempt to corral peoples’ emotions as a resource for brands will become increasingly despised and resisted, and personal emotional fulfilment will emerge as part of the commercial agenda.

Emotional fulfilment was always central to individuals’ agendas anyway. But, just as making the most of individuals’ information and attention are part of the buyer-centric agenda, so helping individuals make the most of their emotional lives will be an important contribution of certain types of person-centric business.

Alan Mitchell

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AlanMitchell Advertising, Branding, Marketing

Attention is a resource marketers use to drive sales of their products.

They use advertising and other marketing devices to draw attention to their offerings, remain top of mind and influence preferences, choices and behaviours.

Marketers treat attention as a potential resource for the firm, not as a potential source of value to the attention holder.

The media makes its money by trading in consumers’ attention; by selling it on to advertisers. But as information overload sets in the ‘price’ of attention is rising. And new technologies are enabling individuals to filter, edit and specify what they pay attention to. Power is shifting from the media owner to the attention owner.

This means the marriage between media and marketing is coming to an end. ‘Return on attention’ – creating value for the attention holder – is the emerging attention agenda.

Alan Mitchell

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AlanMitchell Advertising, Branding, Marketing