Table of contents for August/September 2015 in Marketing

COVER BY THANH LU Studio director, J. Walter Thompson, Sydney "What defines value? The perception of value can differ greatly between people. For me, value is something that is gathered in the creation. The process via which an object or idea is born, where fine details, both large and small, come together to produce a beautifully crafted result. I wanted to represent this visually, with the cast mould being the medium that allows elements of value to flow towards the centre, collecting in the letterforms and accumulating in the end product." * CONTENT PARTNER: a Marketing Content Partner is an organisation with which we’ve entered into a partnership to collaborate on content for the magazine (see page numbers listed for each), as well as exclusive content only available to Marketing…

Noun 1. The material or monetary worth of a thing; the amount of money, goods, etc., for which a thing can be exchanged or traded. 2. The worth, usefulness, or importance of a thing; relative merit or status according to the estimated desirability or utility of a thing. Verb 1. Estimate or appraise as being worth a specified sum or amount. Origin: Middle English: from Old French, feminine past participle of valoir ‘be worth’, from Latin valere. The Oxford English Dictionary “The value in the future will be created by the data footprints our interactions make.” – Steve Sammartino on the importance and value of smart devices. Page 74. “Their failure to demonstrate transparency, and their neglect of the externalities of their supply chain, ultimately undermine consumer confidence and reduce…

We are undergoing a value revolution. In the past few decades, marketers have changed their understanding of how value is created and delivered. Customer value – the benefit customers obtain from using a product or service – which was once understood as produced and delivered by firms, is now understood as dynamically co-created by multiple stakeholders in the market. Marketers’ understanding of value has gone through four different waves. Understanding these waves allows marketers to ride them better and to take advantage of the current marketing landscape. FIRST WAVE: VALUE IN PRODUCTION Value in production corresponds to the traditional idea that value is produced by companies and consumed by its customers upon acquisition of a product. When producing goods and services, companies transform raw materials into other products. This transformation…

ACHIEVERS are people who place a high importance on attaining and exhibiting social status. In this pursuit they may put their own interests ahead of others. They focus on money as a way to show they have succeeded. SURVIVORS try to always give their best effort while being modest and self-effacing. They are not looking for a lot of money, just enough to pay the bills. They are careful with the money they have. They want to keep their life as simple and uncluttered as possible. SOCIAL RATIONALS want to save the world, not because they are idealists, but because they feel it is sensible to do so. They view the world as a large and diverse place where differences should be respected in order to maintain order. They value…

Background: Jeep had always been a niche brand in Australia that was lacking relevance for most Australians, and in this cutthroat, highly competitive Australian car market, it had been fighting to hold ground, let alone grow market share. Between 1999 and 2009, Jeep sales remained flat, averaging 4600 unit sales per year, with little deviation. Interestingly, at the same time, the SUV segment in Australia was growing at an average of more than nine percent from 2000. Jeep, however, was not profiting from this growth. Its cars were perceived as 4WD American army vehicles – an image not very attractive for the ‘footy mums’ of Australia. They didn’t want to drive a US army vehicle; they wanted something that fitted their needs and lifestyles. In fact, vehicles from the US…

Values – as marketers they sit at the core of everything we do, although sometimes we don’t recognise how important they are in defining our success. One of the modern day marketing geniuses, the late Steve Jobs, said, “Marketing is about values.” And it is… • creating value propositions that will appeal to our target markets • developing products that deliver value to our customers, and • understanding the difference in value between our offer and that of a competitor. We all know Jobs as a visionary when it comes to marketing, and Apple can claim it has produced some of the most innovative and successful campaigns and products in recent history. There are very few brands that have been able to capture the imagination and devotion of their customers.…

The statement ‘information is power’ has never been so relevant, especially in these days of data-driven competitive advantage. Just like 15th century Florence, however, today’s Silicon Valley has also become the epicentre of our era, partly because of the contributions made by a few ‘corporate-humanists’. That is because determining a standard deviation, mean or frequency distribution will have little to no value if it cannot be interpreted beyond mathematical terms and translated in human terms. This is because the crunching of numbers may quantify but not necessarily improve our lives. Thus, qualitative practices and mindsets is what can unlock the eventual analysis-paralysis that terabytes of data has brought to the workplace. According to Kaj Lofgren, managing director of The School of Life, Melbourne: “As technological advances accelerate all around us,…

Recently, I’ve been doing a lot of work understanding new advancements in the online space and how it might change our world, because that’s my job. While perusing the matter, one thing has become more and more evident: how Google operates in the world and how that’s going to change. The way I see it, Google must be finding itself at a bit of a philosophical crossroads at the moment, and I’m not sure what I would do if I were in its position. Moreover, it could have a significant impact on all of us. Allow me to explain myself… Last year, the world economic forum identified ‘digital misinformation’ as one of the main threats to the world, alongside terrorism and environmental catastrophe. A recent study has also highlighted how…

Technology has dramatically changed the relationship between brands and customers, shifting the power dynamic into the hands of the consumer – who is now empowered by technology to take control of her buying journey. As a result, Forrester contends we are operating in the age of the customer, where the only sustainable competitive advantage for firms is knowledge of and engagement with these empowered customers. To succeed in the age of the customer, two elements are essential: • a customer-obsessed approach to defining the business and marketing strategy, and • an in-depth understanding of customers’ behaviours and needs. But an emphasis on responding to changing customer needs isn’t just a way to engage new customers in new ways. It’s an opportunity to rethink how marketing is done from scratch, examine…

The right code Producing the epitome of the modern marketer is an increasingly complex challenge for educators. The pace of change within the practices of business means that the planning of study programs is fraught with the danger that current concepts may become irrelevant artifacts by the time graduates get into action. For educational institutions, there is a danger of chasing trends. Some fundamentals apply. Critical thinking and strategic planning have long been requisites for marketers and that is unlikely to ever change. In recent years quantitative skills have risen in prominence and there has been a push for more innovation and creativity. My personal view is that marketing programs, both at an undergraduate and postgraduate level, need more psychology, more qualitative methodological approaches to research and more leadership. Most…

Value, or the perception of value, is the determining factor in the myriad decisions we make every day. From where we go for coffee, to whom we buy our goods and services from and even how long we stay in a relationship, work or otherwise. In this issue, we explore the concept of value and how it relates to our work as marketers. Graham Plant from Effective Measure explores value shopping and the importance of price versus quality, and then price versus social values. It is a great read, as is John Cassidy’s piece on facilitating a two-way value exchange between business and customer, and customer and business. Enjoy this issue and the discussion that will follow online at www.marketingmag.com.au.…

The panel Who we spoke to for this article The social researcher: Neer Korn, The Korn Group Korn is one of Australia’s most respected social researchers and is regularly quoted in the media. Every week, he spends hours with consumers, investigating topical issues. He works with a range of blue chip companies and government departments. The advertising strategist: Jody Elston, AJF Partnership Elston works for one of Australia’s leading independent advertising agencies as strategy director. AJF is a regular winner of Effie Awards for effective communications. Elston has previously worked in brand consultancy and client-side as an insight strategist. The retail consultant: Jason Mahoney, Kantar Retail Mahoney is managing director of Kantar Retail and consults to major FMCG and liquor companies on category strategy. He advises brands on how to…

Background: Animals Australia is one of Australia’s foremost national animal protection organisations, representing some 40 member societies and thousands of individual supporters. Animals Australia has a track record of investigating and exposing animal cruelty. In the last three years, Animals Australia has focused on putting a stop to animal cruelty affecting pigs, egg-laying hens and chickens in factory farms. In doing so, Animals Australia faced three huge challenges: 1. Australia’s love affair with meat Australia has the second highest consumption of meat per capita globally, consuming an average of 111.5 kilograms of meat each year. Concentrated Animal Feeding Operations (CAFOs or ‘factory farming’) have become increasingly prominent in order to meet a rising demand for meat. 2. Australia’s consumers were green-washed and blissfully unaware of the cruelty that is factory…

No matter what type of business you’re in, your marketing budget always needs to be justified. Though, in the not-for-profit sector, a marketing budget is more often than not a ‘nice to have’. Justifying the expense of advertising or promotion – over delivering core programs to disadvantaged young people – is an ongoing challenge. It’s not that these charities don’t see the value in marketing. They absolutely do, and their struggle with brand awareness and lack of profile in turn makes it difficult for them to seek funding and build scale. It’s because of this catch-22 that having access to the goodwill of the media, marketing and advertising industry is invaluable. SMALL TEAMS, LEAN BUDGETS UnLtd’s charity partners tend to be smaller operations that run highly effective programs, but operate…

The value equation is a simple idea in the world of marketing: Value = Utility ÷ Price. We refer to it as a tool of eternal importance, but we so often fail to be masters of the equation itself. Instead, we modify the price to improve value once a product or service is established. And recently, the direction of that change is almost always down, as it’s the simplest and quickest way to improve the value equation and respond to the market. But it wasn’t always this way. Once upon a time, the traditional big brands had some significant things to their advantage in the value equation. Mostly, they had big barriers to entry for anyone who might arrive. This enabled powerful brands to keep their prices artificially high in…

Volvo, the 87-year-old Swedish car company, is in a delicate situation. In 2010 it was bought by the Chinese company Zhejiang Geely Holding Group, normally referred to just as Geely (previously, Volvo was owned by the US carmaker Ford). Since then, the company dhas been walking a fine line, trying to stay true to its Scandinavian values of safety, environmental concern and classic understated design, while at the same time trying to appeal to affluent Chinese buyers who demand more luxury and performance from their cars. In August of 2014, Volvo launched a stylish new sport utility vehicle (SUV), the XC90, in an effort to bring these two worlds together. The XC90 is Volvo’s attempt to break into the premium automobile market, an area normally dominated by its much bigger…

Value, like beauty, is a concept that lies in the eye of the beholder, subject equally to trends and fashion. Our perception and definition of what comprises value has gone through a rapid evolution over the past few years and is set to shift even more as technological advances bring new ways for value to be delivered and interpreted. While value was once seen as the price on the box – and lower price meant better value – the shift is now towards the value generated by long-term relationships between consumers, suppliers, stakeholders and brands. VALUE VERSUS COST Cost is a paramount consideration in the eyes of many administrators and, in its purest form, value only increases as the worth of the output surpasses the cost of production. Even if…

Value’s a funny concept. The basic definition of marketing, of business, is that of a value exchange. Yet what constitutes value is such a subjective and fluid thing. Which is exactly what we’re trying to get at with this issue. From value as in price (which every red sign proclaiming ‘best value!’ assumes to be the one and only measure of value), to those things people value dearly or otherwise, like family, health and status. Then there’s the value of what we do as marketers. Putting a ‘value’ on companies is easy. Putting a value on a brand is harder, although arguably achievable, at least for benchmark and comparison purposes, as we’ve dissected in the infographic in this issue. And what about us? Brands go on the balance sheet and…

As humans, we like to think of ourselves as stable, as having ‘an’ identity. As marketers, it’s necessary to simplify and generalise, in order to do our jobs. But in reality, consumers are fractured, able to hold lots of seemingly incompatible points of view. GfK Australia’s head of qualitative research, Andrew Therkelsen has been talking to people for the last 15 years about what makes them tick, their interests and what they perceive to value. Bubbling away in his head lately have been behavioural economics, evolutionary psychology and authenticity, and how they relate to brands. We had the opportunity to pick Therkelsen’s brain about the contradictory enigma that is the human mind. Marketing: How can we try and label people, put them into buckets when, really, nobody’s that…

It used to be so simple. We had a product targeted to a customer at a particular price point and, all being well, we sold that product once, maybe multiple times to that customer. If we had the opportunity, we presented different products and services, and some of our customers bought those too. So, for every customer relationship, we could allocate a dollar sign revolving over their heads that was commensurate with the value they would assign to our relationship. ‘Customer Lifetime Value’ and other measures soon became part of the lexicon of terms we used to communicate and make investment decisions. Those were happy days. Two things have changed the dynamics of how we understand customer value. First, have changes in the value placed on customers come about due…

Background: Barcelona is a city exceeding 1.6 million inhabitants and, as capital of Catalonia (Spain), it is the centre of a metropolitan area with a total population of about five million. Barcelona is one of the main economic engines of the Mediterranean, establishing itself as a centre for attracting foreign investment (€4 billion). This has led to the creation of a favourable environment for the proliferation of companies and start-ups, resulting in a city cluster of more than 7000 businesses, as well as a local population entrepreneurial activity rate (EAR) of 6.7 percent, ranking above figures in Germany, France and Finland. Starting point Several marketing studies of the city were commissioned in collaboration with businesses and institutions. These identified a gap in the perception of the city’s image between its…

“The challenges modern marketing teams face are coming in faster and hitting harder than ever before” – Jason Shen. While the MIT (Massachusetts Institute of Technology) study to which Shen refers addresses components of a marketing team that increase productivity, the purpose of my article is broader than team characteristics. As discussed in previous articles, my focus is to address a series of issues at a strategic level in order to enhance the role and relationship of the CMO within the C-suite. This is because some research has shown the CMO to be losing authority, causing the senior marketer’s responsibility to be increasingly narrowed to marketing communications. Ongoing comments to me made by senior marketers reflect their desire to ensure their organisations take a long-term view rather than short-term one,…

In 1991 I borrowed $2000 from my parents for my first computer. It was a secondhand Mac. After removing the screen, that very same Mac now hangs from a tree in my backyard – as a birdhouse. Its value has changed. Once valuable to a university student, it now provides value to a family of Indian mynas in the form of shelter. I’d have more chance selling that Mac as a birdhouse than as a computer. Value is an elusive concept. It’s probably the idea most often misrepresented in marketing, business and, well, the world. The go-to metric is dollars, pounds or whatever currency people are paid in. But even by using ‘money’ to understand value, we can see how fluid value actually is – something is only worth a…

As an industry, we’ve seen for some time senior digital leadership appointments. At first this would feel natural given acceleration in technology and changes in consumer behaviour; however, it raises some bigger questions. Questions because we’re in the middle of the most dynamic era of marketing yet and the value agencies bring has never been more important. I have a hypothesis. If your agency has a head of digital, chief digital officer, head of innovation or anything of the nature, that agency (and your business) is in dangerous territory. Digital today is ubiquitous. It runs through every aspect of consumer/customer behaviour. So it equally has to run seamlessly through your agency. It can’t be one person’s responsibility, or even one department’s responsibility. Agencies that appoint such roles need to remind…

After 20 years in telcos, most recently Vodafone, as well as 3 Mobile, Optus, and Cable and Wireless in the UK, Kotatko brings a fresh perspective to her role at NRMA, as general manager, brand, acquisition and marketing,. “My remit is to basically centralise the marketing function, which was quite decentralised, and to think about brand strategy, because up until now brand has been considered a logo. I was given acquisition as well, which is really exciting, because that actually is what shapes our target segment and the whole plan for growth,” she explains. “That’s actually what excited me about the role.” Over the last two and a half years, Kotatko has driven a complete turnaround in net promoter scores (NPSs) among Vodafone employees and customers. She played key roles…

FROM MY PERSPECTIVE, green marketing and shared value strategies have the same fundamental basis in that they are both strategies aimed at building brand equity by aligning with core consumer values. The aim is to reinforce a society’s ability to manage challenges while bolstering economic resilience, building a stronger market and community. Many businesses, however, myopically view shared value as an accessory to business as usual. THE GOOD Tesla: as a clear indicator of adding economic and social value, it rebranded and recycled one of GM and Toyota’s old production sites, employing 11,000 people to manufacture the Tesla S. The Powerwall home battery allows homes and businesses, with solar-arrays, to stockpile energy during the day and can be used night and morning, without having to draw more energy from the…