We Need to Rethink Marketing!

In a hyper transparent world, the old concepts of marketing no longer applies. In a new book, Skibsted and Hansen argues that if you want to increase brand value, improving the product is the only thing that works.

We need to rethink marketing! Instead of focussing on promotion, pricing, and placement, we should direct our attention to the product and the value it creates for the customer. That is core message that Jens Martin Skibsted and Rasmus Bech Hansen wish to convey in their new book “Back to Reality” (in Danish: Tilbage til virkeligheden).

With McCarthy’s Four Ps still being the standard model in business school curriculum and in most marketing practices, only focussing on the product and dismissing the other 3 Ps (price, place, promotion) is definitely a novel and controversial approach. The question is whether it is applicable? To explore this we took two excerpts from the book and asked the two marketing professionals Christian Bjerring, Partner and Consultant at The Consulting Firm, and Josh Spear, Founding Partner at Undercurrent, to comment on the ideas.

From “Back to Reality”, by Jens Martin Skibsted and Rasmus Bech Hansen:

“At the core of the current development is the fact that immaterial values are becoming an increasingly important aspect of a product’s or a company’s value creation, while competition across all markets are becoming more fierce and the traditional methods of creating immaterial value, like advertising, are becoming impotent. These years, the digital revolution transforms most markets and leads us in a direction where, in principle, everyone has the potential to know everything about a company or product. It is from this that the basic premise and focal point of this book is derived: Increased brand value equals increased user value, which then again equals extraordinary product value.”

“In an ultra competitive and transparent market, of which a fully digitalized market is the purest example, the marginal brand value equals the marginal value – both soft and hard – the company’s product offers the customer and the world. This is the new iron law. In other words, the only way you can increase the value of your brand is by increasing the value created by your product for your customer or user. Companies that are spending money on externalities that does not directly increase value for the target group will become less competitive than companies that only invest in the things that provide value to the customer or user.”

The equation is logical and straightforward – the execution is not

Christian Bjerring

According to Christian Bjerring the basic premise of the book holds true, but the devil is in the execution.

“The essence of branding is to obtain and to hold a unique position in the consumer’s mind by repeating the same message or key statement over and over again. This can of course be done by communication and advertising – but also products speak their own powerful brand language. So in most cases it will be a losing battle,  to try to brand a product as something, it does not stand for or does not offer. The product and the branding of the product should be aligned. Consequently the consumer’s perceived brand value is likely to have some kind of parallelism to the nature and features of the product; the user value. Increased user value will therefore have a positive impact on the brand value, and vice versa.

The question is then: Does increased brand value or increased user value lead to increased product value? The answer is yes. The more attractive a product or a service appears to be to its audience, the higher the value of the product or the value of the company.

As the logic of equation is true and almost obvious, the interesting question is: Why is it so difficult to increase product value by increasing the brand value? Unfortunately the problem lies in nature of the disciplines of producing and branding: First of all the producer of the product must be able to look from the outside in – to truly meet the customer’s needs and expectations. This sounds easy, but many companies fail. A product is made in a factory, a brand is bought by a customer, and these two parts of the equation does not comply easily. Next, in the discipline of branding it is vital to focus on the exact, right product feature that adds most value to the customer experience, in order to succeed. And often wrong choices are made. Last, but not least – having found the best possible brand position – the branding of the service or product must be consistent throughout all communication in all channels in order to build, hold and increase the value of the brand. Not an easy task, either. So, even though the equation is logical and straightforward, the execution is not.”

“In order to put the equation to the test, first of all it is necessary to look beyond both poor branding and low quality products, that does not live up to the customer’s expectations. Having done that, I still haven’t found any exceptions. Even brands with a brand promise that clearly and intentionally differ from its product attributes – like e.g. Marlboro which is an unhealthy product that positions itself in a healthy, outdoor environment – brings added user value to its customers due to the lifestyle it associates to. And by doing so the product value of the cigarette increases.

Also brands that does not position themselves as high quality – are able to increase user value which equals extraordinary product value: Just like the user value of, for instance, a car branded as a cheap car, is the ability to get around without paying a lot – which again adds product value and increases the value of the company. And it goes for low-cost supermarkets as well. They are of course not able to charge premium prices, but nevertheless the company value increases because of the increased user value of cheap shopping.

In others words, it is my belief that well executed branding will add increased user value and extraordinary product/company value regardless of industries and markets. And increased product value will do the same.“

Make the customer feel at home

Josh Spear – photo credit Joshspear.com

Josh Spear was less convinced by the argument. He acknowledged the core idea, but was not willing to abandon the traditional marketing principles.

“I agree, that it’s the products themselves that ultimately create the most value that can stand the test of time– however not in the order of operations he suggests in this translation.

A single brands ability to increase a user’s value correlates directly to the usage of a product or service in some way.  The worlds most valuable brands didn’t get there just on advertising– although that helped, they created a level of consistency that made a user, customer, or human feel at ‘home’ within that brands world.

There are few industries that this is more apparent than in consumer products.  The most valuable brands in the world like Apple, Coca-Cola, Google and more rely on a set of products that customers would lay down in traffic for.  Apple consumers wouldn’t be caught dead using a PC.  Die-hard coke drinkers would rather drink something else altogether than Pepsi. Google users find no better alternative than the service they’ve become accustomed to using.”

A timely debate

Industries are evolving and we are experiencing a more transparent world, which challenge some of the cornerstones of traditional marketing. But it is an open question whether this will lead to the fall of marketing as we know it, or if marketing will simply adapt to the new circumstances? “Back to Reality” introduces a timely debate on the future of marketing; a debate that we should not disregard. Regardless of whether Skibsted and Hansen’s suggestions will create a shift in marketing or not, we need to be willing to continuously challenge and develop our practices – and “Back to Reality” provides a qualified starting point for such a discussion.

Source: Grasp (http://goo.gl/NergWV)