Image and Emotional Marketing

Companies are increasingly turning to image and emotional marketing to win customer mind share and heart share. Although this has gone on from the beginning of time, today it is accelerating.

The old marketing mantra advised companies to outperform competitors on some benefit and to promote this benefit: “Volvo is the safest car”; “Tide cleans better than any other detergent”; “Wal-Mart sells at the lowest prices.”

Going under the name of benefit marketing, it assumed that consumers were more influenced by rational arguments than by emotional appeals. But in today’s economy, companies rapidly copy any competitor’s advantage until it no longer remains. Volvo’s benefit of making the safest car means less when customers start seeing most cars as safe.

More companies are now trying to develop images that move the heart instead of the head. Those addressed to the head tend to state the same benefits. So companies are trying to sell an attitude like Nike’s “Just do it.” Celebrities are shown wearing “milk mustaches.” Prudential wants people to have a “piece of the rock.” These campaigns work more on affect than cognition.


Companies are turning to anthropologists and psychologists to develop messages that touch emotions more deeply. One approach is to build the image of the product around some deep archetype—the hero, antihero, siren, wise old man—that resides in the collective unconscious.

You can readily find out how your customers and noncustomers see your company and your competitors. A marketing research firm would ask: “How old a person is this company?” (The answer may be a “teenager” in the case of Apple Computer and a “grandfather” in the case of IBM.) Or “What animal does this company remind you of?” (Hope for a lion or a monkey, not an elephant or a dinosaur.)

Information and Analytics

A former CEO of Unilever said that if Unilever only knew what it knows, it would double its profits. The meaning is clear: Many companies sit on rich information but fail to mine this information. This has led to an explosion of interest in knowledge management: organizing a company’s information so that it is easily retrievable and learning can be extracted from it.

Many companies, especially those resulting from mergers or acquisitions, have ended up with incompatible data systems. Before they can get a whole view of their customer, competition, and distribution, they have to streamline and integrate their data into a single data system.

Marketing is becoming more based on information than on brute sales power. Thanks to the computer and the Internet, no salesperson can say to the boss that he or she didn’t know the prospect’s industry, company, problems, or potentials.

Using sales automation software, a salesperson can record each prospect’s and customer’s needs, interests, opinions, and hot buttons. The salesperson can answer questions in the prospect’s office by connecting with the company’s mainframe or other resources on his or her laptop.


The salesperson, after negotiating, can print out a customized contract for the prospect to sign. And afterward, the salesperson can look up what any customer bought and figure out further opportunities for cross-selling or up-selling.

Besides sales automation software, companies need marketing automation software to help their marketers gain efficiency and effectiveness.

One form is real-time inventory management, where a marketer can tell what the company and its competitors sold yesterday, including features and prices. This not only facilitates more synchronous production planning but also allows real-time tactical responses.

• Some people define Wal-Mart as an information system company more than a retailer. Wal-Mart knows the sales of each product in each store at the end of the day, making it easier to order the right replacement stock for the next day. The result: Wal-Mart carries lower inventory and therefore needs less working capital. Its ordering is driven by real demand, not by forecasted demand. It has synchronized its ordering with the demand flow.
• 7-Eleven in Japan is another retailer making data-driven decisions. 7-Eleven replenishes its stock three times a day in response to orders from individual store managers of what they expect to sell in the next few hours. 7-Eleven not only trains its store operators to capture customer and sales information but also teaches them how to use it.

Another form is real-time selling, where a company has programmed in rules suggesting other products and services that might be mentioned to a prospect or customer on the spot.

• Suppose a couple in their late forties comes into a bank for a home repair loan. Such customers are likely to have college-age children, and the bank might mention a college loan as well.
• A business traveler checks into a hotel that knows from her record that she is a frequent traveler. The hotel clerk might offer to arrange for her stays at sister hotels for known future dates.

Still another form is marketing process automation, where a company has codified its marketing processes that its product, brand, and segment managers need to know to operate more effectively.

A brand manager needing to do a concept test turns on his computer and looks up the six steps in a concept test; he receives tips and best-of-class examples. A brand manager needing to choose an appropriate sales promotion turns to her computer to get world-class advice.

Yet another form is an assortment of software packages that facilitate handling such processes as new product development, advertising campaigns, marketing projects, and contract management. They are being developed by Emmperative, E.piphany, Unica, and several other marketing automation firms.

In all battles—military, business, and marital—victory goes to the party that has the better information. Arie De Geus, former strategist for Royal Dutch/Shell, observed: “The ability to learn faster than our competitors may be our only sustainable competitive weapon.”

At the same time, managers often must make decisions before they have all the facts. If they wait too long, the opportunity may be gone.

Innovation

Firms face a dilemma. If they don’t innovate, they will die. And if they do innovate—and their innovations are not successful—they may also die. Given that only 20 percent of consumer packaged goods introductions are successful and maybe 40 percent of new business-to-business products are successful, the odds are discouraging.

Yet innovation is a safer bet than standing still. The key is to manage innovation better than your competitors. Innovation and imagination must be made into a capability, as it is at 3M, Sony, Casio, Lexus, Braun, and Honda.

These companies have been called “product juggernauts” in that they run product development as an ongoing and interactive process, with the manufacturer, sales force, and customer all working together to develop, refine, adapt, and improve products.

The innovation process has to be managed carefully as a set of processes, including idea development, idea screening, concept development and testing, business analysis, prototype development and testing, test marketing, and commercialization. The company needs to build in or acquire the competencies needed in each step of the process. And it must appoint a well-seasoned leader of the innovation process.


Gary Hamel holds that innovation can be a strategic capability, just like in some companies quality is a discipline. Innovation is not achieved by a two-day brainstorming session. Success requires developing three markets within the firm: an idea market, a capital market, and a talent market.

The company must encourage and reward new ideas; it must set aside a pool of money to finance investments in promising new ideas; and it must attract the talent necessary to implement these ideas. And those who contributed the ideas, capital, and talent should be rewarded.

Innovation is not limited to new products or services. It includes thinking up new businesses and business processes. Nestlé sells coffee in the groceries but it was Starbucks that thought up a new way to retail coffee.

Barnes & Noble thought up a new concept for a physical bookstore, and Amazon thought up a brilliant system for selling books online. All of the following were major business innovations: Club Med, CNN, Dell Computer, Disney, Domino’s Pizza, Federal Express, IKEA, McDonald’s, watchmaker Swatch, Wal-Mart.

A company needs to pursue both continuous improvement and discontinuous innovation. Continuous improvement is essential, but discontinuous innovation would be even better. A greater sustainable competitive advantage can come from discontinuous innovation, albeit at a much greater cost and risk.

The risk comes from several facts: The technology is evolving, there are competing technologies, the market is ill-defined, there is no delivery infrastructure, and timing of completion is difficult. Furthermore, marketing research is of little value.

Discontinuous innovation hurts the bottom line in the short term, and it may not help the bottom line in the long term. The conventional new product process works well for continuous improvements but does not work for discontinuous innovations.

Where should companies go to get new product ideas? A marketer’s normal answer is to ask customers what they need. Done right, this can yield useful ideas, but probably incremental rather than breakthrough ideas.

Consumers would not have answered that they wanted a PC, Palm, Walkman, wireless phone, or camcorder. Akio Morita, Sony’s late CEO, said: “There was no need for market research. The public does not know what is possible. We do.”

The truth is that ideas can come from anywhere, and not only from customers or the lab. Every firm is a potential hotbed of ideas, except the company fails to stimulate them or lacks a net to catch them.

Why not appoint a high-level idea manager to whom salespeople, distributors, suppliers, and employees could send their ideas? The idea manager has a committee that finds the better ideas and rewards those whose ideas the company implements.

The Dana Corporation, for example, expects every employee to place two ideas a month into the company’s suggestion box on any improvements the employee senses, whether in selling, purchasing, energy use, travel, or other areas.

Companies that expect mild improvements can usually get them. The trick is to ask for a huge improvement. Instead of a 10 percent reduction in costs, ask for a 50 percent reduction in costs.

Instead of a 10 percent improvement in productivity, ask for a tenfold improvement. The effect of this is to force everyone to reexamine the operation and design a better operation, instead of only squeezing out a little more from the present operation.

Every business should examine its innovation index. This describes the proportion of its sales derived from products less than three years old. No company will survive with a zero innovation index.

A traditional business will have a hard time if its innovation index isn’t at least 20 percent. High-fashion clothing businesses need at least a 100 percent innovation index to succeed. The message: Innovate or evaporate.

Intangible Assets

The modern balance sheet is a lie! It omits the company’s most important assets. Probably 80 percent of a company’s value lies in its intangible assets; but they are not on the books. The value of a company’s plant, equipment, inventory, and working capital hardly reflects a true value of a company.

For example, where is Coca-Cola’s brand value on the company’s balance sheet? Coca-Cola’s brand value is estimated at $70 billion. Where is the value of its customer base? It’s the satisfied customers who repeatedly purchase from the firm who constitute a major asset.

Where is employee value? Having better employees than the competition will spell the difference between having superior profits and average profits. Where is partners value? Loyal suppliers and distributors can make a company, and disloyal ones can break a company. Where is knowledge and intellectual capital value? Patents, copyrights, trademarks, and licenses can be one of the company’s major assets.

No wonder there is often a huge gap between a company’s market capitalization and its book value. The gap reflects the value of the intangibles. For example, America Online’s book value in 1999 was only 3.3 percent of its market capitalization. Thus 97 percent of AOL’s value was not on the balance sheet.


Companies would be wise if they start identifying and assessing all their marketing assets such as their brands, customer relationships, employee relationships, channel relationships, supplier relationships, and intellectual capital. The company should choose marketing activities that build the value of their market-based assets.

Should your company even consider owning physical assets? Owning physical property can be a liability. All a company needs is access to physical assets. To operate as a lean company may call for decapitalizing—outsourcing activities and shrinking working capital. The Sara Lee Corporation, for one, thinks that it is better to own brands (Champion, Coach, Hanes, Playtex, Hillshire Farm, and others) than factories.

International Marketing

A company that masters only its domestic market will eventually lose it. Strong foreign competitors will inevitably come in and challenge your company. It is now business without borders.

One of the best growth paths for a business is to go regional or global. But most companies hesitate to go abroad. They see obstacles and risks stemming from tariffs, language differences, cultural differences, devaluation and exchange control risk, and bribery.

But there are also gains. By going abroad, companies actually diversify their risks by not depending on only one country’s market.

In fact, the market for their products and services may be mature at home and growing abroad. Furthermore, these companies will be stimulated to improve their products as they compete in new situations against new competitors.


But companies must adapt their products and marketing mix when they go abroad. Asea Brown Boveri (ABB) uses the slogan: “We are a global firm local everywhere.” Royal Ahold, the giant Dutch food retailer, has the brand philosophy, “Everything the customer sees we localize. Everything they don’t see, we globalize.”

When naming its new products, a company must make sure its name will travel internationally. Chevrolet named its new car Nova, not realizing that in Latin America no va means “doesn’t go.”

Companies usually evolve globally through five stages:

1. passively exporting, 
2. actively exporting using distributors, 
3. opening sales offices abroad, 
4. setting up factories abroad, and 
5. establishing regional headquarters abroad.

In expanding abroad, companies tend to exercise loose administrative controls initially, preferring to put their faith in their entrepreneurial country managers. Later they start imposing some strategic controls aimed at standardizing global planning and decision processes.

Companies must choose foreign distributors carefully. They need to define distributor performance very clearly and be aware of host country laws regarding distributor treatment. The distributors need to be given adequate incentives to grow the market as fast as possible.

Companies succeed best when they recognize a large target market whose needs are not being met by the current sellers. By inventing new values for this target market that are difficult to replicate and by building a strong company culture to serve this market, the company has a good chance to succeed.

Companies entering developing countries should offer new benefits or introduce their products at a lower price, rather than come in with the same offerings made at home. They must be conscious of liability for the potential misuse of their products due to low literacy and the poor quality of intermediary channels, as well as counterfeiting possibilities.

Two issues arise when a company appoints regional managers. The first is whether to locate regional management at headquarters or in a capital city of the region. The second is whether regional managers should represent the interests of headquarters or of the region’s country managers. The regional headquarters location will influence its orientation.

Although a company may grant high autonomy to its country managers, it can still achieve a fair measure of coordination through corporate information exchange systems, company guidelines and regulations, regional line managers, and headquarters product directors.

Country managers are not all equal. Usually the country managers in the larger markets have more autonomy and influence. The larger markets are often chosen as centers of excellence in the handling of research and development (R&D) and new product launches. They also have a large influence on the country managers in the smaller surrounding countries.

Multinational corporations face tough decisions on which products to emphasize in which countries. The allocation of products and advertising money to the different countries must be guided by consumer preferences and purchasing power, distribution strength, competitor positions, and economic future conditions in each country.

Highly efficient export-oriented companies are likely to gain market share in other countries. This will set up resistance by entrenched interests in the form of high tariffs and dumping charges. Ultimately these exporters may be wise to move production into countries that are resisting these imports.

A multinational that abandons troubled countries will have to eventually abandon all countries. The company should think more of shrinking its presence in a troubled country than abandoning it.

Global countries must learn to use countertrading. Many countries are poor but they will barter. You’d better learn to take some goods in exchange or forget selling to that country. Pepsi-Cola had to promise Russia that it would help sell Russian vodka abroad in exchange for selling Pepsi-Cola in Russia.

When companies fail abroad, the most common factors are:

• Failure to take enough time to observe, absorb, and learn the new market.
• Failure to get reliable statistical information about the new market.
• Failure to define the target user.
• Failure to adapt the product and/or marketing mix.
• Failure to offer adequate service.
• Failure to find good strategic partners.

Internet and E-Business

The Internet offers radically new possibilities for conducting business more efficiently. Just look at what you can do now that you couldn’t have done (or done easily) before:

• You can display much more information about your company and products—and sell them—on a web site operating 24 hours a day, 7 days a week.
• You can purchase more effectively because you can use the Internet to identify more suppliers, put out requisitions online, buy on market exchanges, and hunt for bargains on online auction markets and used goods markets.
• You can place orders, transact, and make payments to suppliers and distributors faster and at a lower cost by setting up extranets with your partners.
• You can recruit more effectively using online job listing services and e-mail interviews.
• You can supply better information and training to employees and to your dealers through the Internet.
• You can set up an intranet to facilitate communication among your employees, as well as between them and headquarters and your mainframe computer. The intranet can feature newsletters, personnel information, product information, e-learning modules, company calendars, and so on.
• You can promote your products over a much broader geographical area.
• You can more efficiently research markets, customers, prospects, and competitors by tapping into the wealth of information on the Internet and by carrying out focus groups and surveys on the Internet.
• You can send ads, coupons, samples, and information to requesting or targeted customers.
• You can customize offerings, services, and messages to individual customers.
• You can substantially improve your logistics and operations using the Internet.

The Internet provides a brilliant new platform for communicating, buying, and selling. Its benefits will only grow over time. Business leaders have lauded its potentials:

• Jack Welch of GE admonished his people to produce more than a web site: “Embrace the Net. Bring me a plan how you are going to transform your business beyond adding an Internet site.”
• John Chambers, CEO of Cisco, aims to Web-ify Cisco’s entire business: “Every customer interaction provided by a Cisco employee that does not add value to the business ought to be replaced by a Web-based function.”
• Bill Gates, chairman of Microsoft, sees the Internet as indispensable to companies: “The Internet is not just another sales channel. The future company will operate with a digital nervous system.”

By embracing the Internet early, companies have greatly reduced their costs compared to late-adopting competitors:

• Dell, by selling customized computers through low-cost telecommunications and Web channels, has a much lower cost of doing business than HP/Compaq, IBM, and Apple. Dell has grown at twice the rate of the rest of the industry and is now the leading personal computer seller in the United States.
• GE claims to have saved hundreds of millions of dollars of its purchasing budget by establishing its Trading Process Network and requisitioning products over the Internet.
• Oracle ran an ad claiming to have saved over a billion dollars by using its Internet-based systems in running its own business.

Although the main benefits of the Internet are many and varied, it was e-commerce and not the other applications that caught most of the public’s attention. E-commerce meant the opportunity to convert the Internet into a selling channel.

E-commerce dot.coms started by selling books, music, toys, electronics, stock buying, insurance, and airline tickets, and soon added furniture, large appliances, home banking, home food delivery, consulting, and almost everything else. The new dot.coms instilled fear in every store-based retailer. Would the availability of online products spell the kiss of death for stores?

Smart store-based retailers such as Barnes & Noble, Wal-Mart, and Levi’s took no chances and set up separate online sales channels. Instead of staying only “brick and mortar,” they moved to “brick and click.”

But many dot.coms collapsed in the late 1990s, having made the mistake of collecting “eyeballs” instead of revenues. One dot.com start-up told the venture capital supplier: “Revenues are a distraction that I cannot afford.” These dot.coms lacked not only an e-business strategy but even a business strategy.

No wonder so many dot.coms turned into dot.bombs. When the dot.com bubble burst, many store-based businesses gave a sigh of relief. Yet smart retailers and businesses did not ignore the potentials of the Internet and added an online presence.

Every company needs a web site today that reflects the company’s quality. One warning: Don’t let your web site be designed by a techie who wants to illustrate his or her technical prowess. Customers can’t wait for all the downloading of pretty pictures. They want information, not show time.

They want a fast download, a clear and uncluttered initial screen, easy passage to other screens, clear information, an easy ordering procedure, and no intrusive advertising.