Preference-based consumer marketing. Why do we ignore it?

There is a vast amount of research that has been conducted recently regarding the consumers’ preferred method of receiving marketing communication. A recent study by Forrester Research, and commissioned by ExactTarget, highlights that the majority of consumers today still have a strong affinity towards email.

The important take out: Consumers prefer email at a rate of three-to-one when compared with any other avenue for marketing communications such as social media, Instant Messaging, phone and SMS!

Despite the abundance of research that all points towards email being the marketing method of choice for consumers, why do marketers continue to ignore this?

Despite the spike of Internet users using social media, for example three quarters of Australian online adults use social technologies (Forrester: Australian Adult Social Technographics Revealed 2008), consumers in general are NOT open to receiving marketing communication via this channel.

As social media continues to boom with new channels for communication being created everyday with new social networking sites and the like popping up, there is an overreliance and tendency to use this medium for all-purposes in order to reach the masses.

Unfortunately we forego the very fundamental principles of Marketing 101. We need to stop, think, plan and go back to basics:

• Who are our customers?
• Where are they?
• What are their preferences for receiving marketing messages?
• What are the right messages for each customer segment?
• What channel do we use to reach them?

A quick Google search and some top line research is enough to reveal where our customers’ preferences sit. It’s all very simple. Follow the basic principles of marketing and target the appropriate marketing messages to the appropriate consumers based on their preferences using the appropriate channels!

Sadly, we are missing the point! We’re frustrating consumers and, ultimately, not getting the outcomes that we desire!

Ogilvy on marketing in a recession

When you attend an Ogilvy marketing in a recession seminar, you don’t expect George Bernard Shaw to come to mind, or even Edgar R Fielder, whoever he might be.

But Shaw once said that if all the economists in the world were laid end to end they wouldn’t reach a conclusion. And Fielder claimed that if you ask five economists you will get five different answers – six if one went to Harvard.

Two of the seven panellists at a lively and informative Ogilvy On Today breakfast Q&A session at the MCA on Tuesday were Phil Ruthven, the founder and chairman of top research firm IBISWorld, and Stephen Joske, the director of China Forecasting Services at the Economist Intelligence Unit in Beijing.

Leading journalist Tony Jones, from ABC television’s Q&A and Lateline programs, hosted the marketing in a recession discussion and began by asking the two economic gurus about whether the current recession was the worst since the great depression and whether the Treasury budget estimate of 4.5% growth in two years was, as Jones described it, ‘’Goldilocks’’ economics.
That’s when you started to think about those quotes.

A gentle recession

Ruthven described the severity of the current problems as being ‘’grossly exaggerated’’, saying it was the ‘’most gentle recession’’ he had ever lived through. And he completely backed the Treasury estimates – ‘’we’re going to come out of this very, very fast’’.

The deep recession

Being an economist, Joske had another view: this was not an ordinary recession with deep damage to the financial system, the so-called green shoots of recovery were, in fact, a false recovery and while China might start moving again at the end of this year the US would not start getting back on track until next year. And his estimate of growth in the Australian economy in two years time was 2.5%, well below Treasury’s 4.5%. It all pointed to a slow Australian recovery next year.

Ruthven said the Australian economy was tied more to the Asia-Pacific than to Europe or the US. Joske said that while China was definitely a positive, it wasn’t enough to restore things to normal.

The expert panel

It all made for fascinating listening for the 100 guests who had gathered to hear the views of a panel comprising Ruthven and Joske, Joe Talcott, the group marketing director of News Limited and the chairman of the Australian Association of National Advertisers, Rose Herceg, STW Group’s strategic director, Mike Daniels, the managing partner and head of strategy at Singleton Ogilvy & Mather, Brian Giesen, Director Digital Strategy at Ogilvy PR, and OgilvyEarth’s senior advisor, Ian Higgins.

The purpose of the morning was to hear, and perhaps challenge, the disparate views on marketing in the current economic downturn of some of the best thinkers in the country, with those views being teased out by Jones.

Sustainability, innovation and digital

Apart from the economy, topics included sustainability, fresh thinking and innovation, trends and the new world of digital.

Higgins said that the general population had finally ‘’got it’’ that we are not living sustainably and were holding that commitment to environmental sustainability through the downturn. Citing Reuters, Higgins said four out of five Americans say they are still buying green products, despite the recession, while a similar percent of 10,000 Australians surveyed last year believe our individual consumption choices can contribute to the greater good of the environment.

‘’We have community leadership on this’’, Higgins said. While warning of the dangers of greenwash – companies claiming false environmental credentials for their products – Higgins said that smart companies were changing their environmental footprint but not talking about it – ‘’you get it right before you speak’’.

Questions were asked about the role of digital and social media in the current business landscape. Giesen said the US marketing experience was that a number of companies had managed to make money out of social media, pointing to computer company Dell which had gained $1 million in extra revenue in the past year by advising of its special clearance offers via Twitter. He added, however, that the main benefit for companies engaging in social media was to develop strong relationships with customers, to understand their customers better and to engage with key influencers.

Giesen also said Ogilvy had initiated a code of ethics – a 66 point plan, no less – for engaging bloggers which he believed essential for responsible marketing.

Daniels said the internet had further increased the necessity for brands to be honest and have integrity because the web opened the companies to public scrutiny in a manner never before experienced.

‘’You must be very honest, very transparent,’’ he said.

The call for honesty was echoed by Talcott, who described the new consumer a ‘’smart, cynical and, most importantly, connected – and to me that changes everything.’’ He pointed out the damage that could be done to a brand by a disgruntled customer using social media.

Daniels said ‘’a lot of digital isn’t very strategic in a business sense. You see ‘wow that’s cool’ but there’s a bit of forgetting that it’s got to make some kind of return.’’

Herceg related how she had been watching a program where a number of highly successful people had stated that recessions ‘’are a great time for imagination and ingenuity and innovation.’’

There was, she said, a place for pragmatism and security but ‘’there is much more to be gain from imagination.’’

Pointing out that most innovation was undertaken by smaller organisations, Herceg said: ‘’If a branded product added innovation it would be almost unbeatable’’ and instanced the Apple iPod as an innovative product from a big brand that now dominated the market.

Her theme was taken up by Daniels who said innovation was a ‘’mindset’’ and instanced companies like KFC and Hyundai which were succeeding despite the downturn through innovation.
Talcott said he believe the consumer was ‘’afraid, and they’re watching every cent they have’’.

When asked about the next big trend, Herceg said she liked to look for pockets of opportunity where nobody else was at the moment – counter-trends – and related how a client, a manufacturer of dairy products, had come to her for ideas. The market was full of low fat products so she advised making something ‘’about 99% butter fat’’: ‘’They couldn’t make enough of it’’.

Herceg said it was essential that business separated innovation and assessment – ‘’you can create all you want, but if it’s a dumb idea it’s a dumb idea’’ – and said that people had to be allowed to fail.

‘’We’re not very good at celebrating failure in Australia. Not good at saying OK, you failed, give it another go.’’

The panel’s advice

When asked by Jones to finish with one piece of advice for business in the current climate the panel responded thus:

• Be brave and take chances (Talcott)
• Innovate by going green (Higgins)
• A company’s two most valuable assets are IP and the organisational culture.  Look after both of those (Ruthven)
• The only place that’s growing is the inland provinces of China. Invest there (Joske)
• Be prepared to change everything. Look at everything you are doing throughout the business and ask does it have to be like this, could it be another way (Daniels)
• Listen to what people are saying about your brand and your products. Establish relationships with your customers (Giesen)
• Get five of your best and brightest employees, take them off their day jobs, lock them in a room and see what they come up with (Herceg)

With that Jones closed the seminar everyone went back to their day jobs, no doubt hoping to be marketing in Ruthven’s recession and not Joske’s.