Thursday, October 17, 2013

Monozukuri for Sustainable Brands in the 21st Century


The word Monozukuri has only been in use for almost 15 years. In 1998, the Japanese Prime Minister’s Office set up a "Monozukuri Kondankai", in order to reverse the trend of deindustrialization and hollowing out that Japan was experiencing after the end of the Japanese financial bubble by affirming Japan’s strengths in manufacturing. In general, monozukuri  is the "art, science and craft of making things." While monozukuri is used to describe technology and processes integrating sustainable development, production and procurement, it also includes intangible qualities such as unique craftsmanship and dedication to continuous improvement. In the Japanese tradition of Monozukuri, when an item or human effort is taken into use, there needs to be a benefit for the society as a result while, at the same time, the balance between production, resources and the society should be maintained. Monozukuri should therefore be an inspiration for most global organizations in the 21st century in their effort to create strong, innovative brands, which deliver compelling content through their media channels, especially then it comes to branding and brand storytelling.

Toyota and Nissan lead the way

Companies such as Toyota and Nissan have already tried to elevate their brands or the company’s core interests by creating unique content that exceeds infomercial-like self reverence.

Back in 2011, Toyota chairman Fujio Cho said that Toyota’s mission is to “preserve the Japanese Monozukuri". What does "monozukuri" mean here? It probably captures the Toyota perception of sustainability. According to Toyota monokuzuri, the person doing the making is de-emphasized and the attention is on the ‘thing’ being made. This subtle difference reflects the Japanese sense of responsibility for using ‘things’ in production and their deep respect for the world around them both animate and inanimate. In its application of Monozukuri to the production of automobiles, Toyota has pursued a sustainable method of making its cars ever more safe, environmentally friendly, reliable and comfortable and circulating this perception to its customers.

At Nissan, brand storytelling has been dubbed “kotozukuri,” complementing the Japanese manufacturers’ mantra of “monozukuri”. Brand agnostic stories, intentionally omitting reference to the parent firm or its competitors, or in Nissan’s case, look to raise the profile of the people, products, technologies and relationships as part of infotainment

 

Why? Actually, it's about Nissan's recognition that traditional media and consumer engagement face more challenges as well as expense amid a growing range of choice. Meanwhile, internal communications, often constituting corporate media or house TV units until now, have expanded from a parochial approach to include more content for mass distribution. The relationship with broadcasters and print media, who often have their own on-line presence, has evolved to include video embeds, undeniably showing return on investment versus the cost of similar paid media exposure. Use by the blogosphere or consumers also has powered the metrics of successful marketing, as “shares” and “likes” offer potential for viral exposure.

It seems that every organization may perceive Monozukuri in a different way. However, "Many names now describe the trend such as brand journalism, corporate narrative or 21st Century Kotozukuri, but all require more sophisticated storytelling and delivery, making ties to traditional agencies"  (Dan Sloan, Nissan Global Media Chief).

Back to storytelling



Storytelling is a well known and ancient art form. Persona-focused storytelling is essential to branding. When it comes to creating a powerful brand narrative, the persona – the articulated form of the brand’s character and personality – comes first, and all other elements unfold from there. A compelling brand starts with a strong, well-drawn, and quickly recognized persona, the essential connection between what a company says and what it does.

This brand persona creates a long-lasting emotional bond with the audience because it is instantly recognizable and memorable, it is something that people can relate to, and it is consistent. Nike, McDonald’s, FedEx are all examples of brands with personas that fit these criteria. In each case, there is a clear personality associated with the brand. These companies understand that it is their clear articulation of their brand persona and their discipline in placing that persona into stories that work with and help strengthen that brand persona is what makes the difference between strong and weak brand associations.



That long-lasting and implicit trust is what distinguishes the great brands from the rest of the pack. It will also protect the brand when it makes a misstep. Nike has a strong brand persona that is all about performance and winning. Their long-used tagline, ‘‘Just do it,’’ is instantly recognizable as is their logo, the swoosh. In 2006, Nike teamed up with skier Bode Miller, which seemed like a good idea at the time. After all, he had won two silver medals at the Olympics in 2002, four gold medals and a silver medal at the World Championship in 2003, and in 2005, he became the first American in 22 years to win the World Cup title. His performance trajectory was clear. If anything, it seemed that the difficulty would be in finding words to match his expected performance.

There was no shortage of words: in TV spots for the 2006 Winter Olympics, Miller was shown talking about performance, talking about his attitude, and talking some more. But there was not much ‘‘doing’’ – he fell short in all five medal attempts. Worse, he did not even seem concerned with winning, an attitude that did not match well with the Nike brand persona. This created a disconnect between the audience and the brand, since the fit between Bode and Nike clearly was not right. Monozukuri here, as a unique value proposition for the consumer, through storytelling, went wrong.

Brand my brain

Brain studies have shown dramatic effects of branding. In one famous study, researchers used functional magnetic resonance imaging (fMRI) to see how subjects’ brains responded when they were given Coke or Pepsi. Some of the subjects were given the soda without knowing which brand it was, and were asked to give their preference on taste alone. Others were given the soda and then an image of Coke or Pepsi was flashed at them before they took a sip.

The result? The blinded tasting resulted in no preference for one brand over the other in the group, some preferred Pepsi, others preferred Coke, but they did not know which was which, so the overall results were what you would expect in two chemically and physically similar drinks. The unblinded tasting was something else altogether. While there was no influence of brand knowledge for people who thought they were drinking Pepsi, there was a very strong brand influence when they were shown an image of Coke. Their belief that they were drinking Coke actually altered their experience to the point where some areas of the brain lit up only when they believed it was a Coke that they were drinking. Clearly, branding is a real, measurable effect. Coke lit up the hippocampus and the dorsolateral prefrontal cortex, areas of the brain related to memory, control of action, and self-image. Our brains love Coke even more than our taste buds do.

How is it connected to storytelling? Actually, a lot of it has to do with the fact that Coke has been telling a good story, using an exciting yet accessible brand persona that people easily relate to. Storytelling has been engaging listeners and readers for ages and Coke figured out how to make that work to their advantage. Researchers have shown that successful storytelling (as a correct Monozukuri version) strengthens the connections consumers have to brands to a great extent.

Conclusion

When it comes to brand development, a unique perception of Monozukuri for each organization may lead our audience in the brand story and its actions. Marketing strategists should always perceive and apply Monozukuri in the optimum way to genuinely connect with the audience and ultimately convert them into loyal customers.

Tuesday, October 08, 2013

Competitive dynamics for marketing strategists

Time for strategic decisions.

Strategic marketing primarily revolves around the application of a great deal of common-sense. Dealing with a limited number of factors, in an environment of imperfect information and limited resources complicated by uncertainty and tight timescales. Use of classical marketing techniques, in these circumstances, is inevitably partial and uneven. For most of their time, marketing managers use intuition and experience to analyze and handle the complex, and unique, situations being faced, without easy reference to theory. A good marketing strategist should be drawn from market research and focus on the right product mix in order to achieve the maximum profit potential and sustain the business. The overall strategy, coupled with the knowledge of the customer which has been absorbed almost by a process of osmosis, will determine the quality of the marketing actions implemented.

Strategic Marketing Planning Process

Strategic decisions

Directional (sub)strategies

Portfolio Planning Tool 1
BCG Matrix (1970) - Strategic framework for resources allocation


Portfolio Planning Tool 2
GE model


Portfolio Planning Tool 3
Shell/A&H 3*3 Matrix

Back to the basics:Porter's competitive strategies


Requirements for generic strategies


Applying the best marketing strategy for every different situation

Back to the basics again: Ansoff for diversification

Critical factors for success/KPI's


Timing

Competitive position strategy

Failure, an unknown word 

Thursday, October 03, 2013

May i have your attention, please?



A long time ago, Daniel Simons and Christopher Chabris conducted a famous experiment. The participants watched a video tape of an amateur basketball game and were asked to count the number of times one team took possession of the ball.  During the film clip, which lasted for a couple of minutes, a person in a gorilla suit strolled onto the center of the court, turned and faced the audience and did a little jig. The gorilla then slowly walked off. Actually, the subjects who were busy counting the ball passes did not notice the gorilla. However, people who were simply asked to view the tape without being asked to count the ball passes had no trouble noticing the gorilla. The effect was so striking that some of the participants who missed the gorilla refused to accept they were later looking at the same tape.

This research offers a lesson for anyone who competes for customers' attention. Just because you think something is important and remarkable, does not mean that others will see it that way.  At any given moment, our audience is preoccupied with something to the point that their brains filter out anything else that does not relate to their focus of attention.

Influence. Creating and changing perceptions. Influence and perception, projecting messages out and taking them in. Two sides of the same coin.

Emotions, then facts

But, how can we have the customers' attention? How can we influence and shape consumers' perceptions? Let's start from the very beginning. The majority of consumers actually buy on emotions and then justify their decisions with logic. We all know that our mood affects our decisions and behavior.  People who receive a small surprise gift and shortly after that are asked about their opinions on home appliances, for instance, are more likely to give a favorable opinion compared to those who did not receive a gift.  Why are emotions so powerful when it comes to our perceptions and actions?  



Both human and animal emotions begin in the subcortical circuits of the mammalian brain, which is the ancient part of the brain.  Through brain stimulation, researchers have been able to isolate seven emotional systems in animals so far: Rage, Lust, Fear, Care, Panic, Play and the Search for resources. Scientists may discover more in the future. Originating in the deep areas of the brain, deep feelings may be more than just an expression after all.  

However, facts should not be ignored. Human brain likes to figure out patterns and make predictions. All our human planning, reasoning, abstract thought and other complex executive functions happen in the cerebral cortex, which forms the largest part of the human brain and is situated above most other brain structures.  The prefrontal cortex, the brain region implicated in planning complex cognitive tasks, decision making, and moderating correct social behavior, is easily overwhelmed. We can process just about seven pieces of information in our conscious mind at any given moment. The brain likes to rationalize, but the more data we have to deal with, the harder it becomes to think clearly. Long live the Analysis Paralysis effect.

Thus, an emotional wrap during our real-world or even better online communication with the customers, is more than needed, including storytelling to build human connections, including pictures and videos for emotional appeal, showing vulnerability, avoiding defensive language, being authentic or even contrarian, celebrating other people's achievements and, last but not least, engaging in discussions and other activities. 

Curiosity

Stimulation or boredom? Human brain is actually motivated by curiosity and the search for patterns. The brain makes sense of the world around by predicting certain outcomes, comparing these predictions to what actually happens and detecting prediction errors.  Based on this information, the brain adjusts the expectations, enabling us to learn from our past experiences. When the brain is busy searching for patterns and making predictions, it produces more dopamine, which is responsible for more pleasurable experience. The popular myth of dopamine is that the neurotransmitter equals pleasure, that it’s the hedonist chemical responsible for sex, drugs and rock n’ roll. The dopaminergic reality is actually much more complicated. 

Consider Wolfram Schultz. His experiments followed a simple protocol. He played a loud tone, waited for a few seconds, and then squirted a few drops of apple juice into the mouth of a monkey. While the experiment was unfolding, Schultz was probing the dopamine-rich areas of the monkey brain with a needle that monitored the electrical activity inside individual cells. At first the dopamine neurons did not fire until the juice was delivered; they were responding to the actual reward. However, once the animal learned that the tone preceded the arrival of juice, the same neurons began firing at the sound of the tone instead of the sweet reward. Eventually, if the tone kept on predicting the juice, the cells went silent. They stopped firing altogether. Schultz calls these cells “prediction neurons,” since they are more concerned with predicting rewards than actually receiving them.

Consumer behavior is not far from there; stimulating human interest and curiosity via engagement with the customers can accelerate the creation of dopamine who are already curious by nature and love unexpected surprises as long as they are pleasant. Social media marketing should involve gradually delivering interesting articles, contest, creative activities, open-ended questions, sharing something about the brand and satisfying customers' curiosity in general.


“We don’t see things as they are. We see things as we are”

Last but not least, a quotation from Anaïs NinWhatever seems real to customers may turn out to be a fabrication of their subconscious mind and the senses.  How they feel and think about the world influences how they actually see it. Their interactions can be, in fact, be shaped by the attributes of our environment. Using varied sensory language that caters for individual styles of communication (visual, auditory, kinesthetic, etcetera), using negative keywords or bizarre images in order to create different perceptions, inspiring and motivating customers (probably in a chaotic way) can take these customers' illusions and make them reality, our reality, via our engagement and communication with our customers.

Because, successful engagement brings satisfying customers and these customers can turn out to be the best business strategy of all.



Thursday, September 26, 2013

Smart Brands - Economic Depressions 1-0


An economic depression affects everyone. During the Panic of 1857, the Post World-War I Crisis, the Wall Street Crash of 1929, the Great Recession of 2008-2009 or even the "Greek Crisis", the basic mechanisms of consumer attitudes were similar. Both the value perceived by consumers and shareholder value were heavily influenced by brand. Brand can drive growth in an up market or protect the company’s value in a down market. But, what really happens we enter a recession phase and what are the impacts? Actually:

• Investors become very risk-averse. They are quick to criticize companies’ performance, resulting in decreasing share prices.
• The labor market is easily depressed causing employees to regard the organizations they work for with a more critical eye.
• Falling consumer confidence leads to heralding either lower prices or sales, but in either case falling profits.

Just steal

Brand development reaches far beyond traditional forms of consumer advertising. However, most still confuse the discipline of branding with ad communications. This interpretation ignores that:

• Brands are strategic assets rather than purely symbolic tools.
• Effective branding is a matter of profit, not just market share.
• Competitive advantage branding is a matter of sustainable investment rather than cost.


During a recession, brands that focus on value, rather than price, can reassure consumers with greater confidence. The moral support that is provided by brands during a recession helps to rebuild that enduring bond between brand and former consumer. As consumers begin evaluating their purchases on a different set of priorities, heritage brands can use the emotional connections that already exist to regain past consumers that have moved on to “higher end” brands. A recession can unlock the relevance trapped within the brands of people’s youth.

The necessity for a clear brand proposition is more important than ever as consumers recognize the need for new ways to work within their shrinking budgets. The companies who recognize and seize the opportunity to steal market share while others are in shutdown mode, will find the benefits far outweigh the costs.

The Buy Down Effect

A comScore survey revealed that one in five shoppers converted to less expensive, generally private label brands to save money. The figures below show the change by market segment after the end of the Great Recession of 2008-2009. Housewares realized no net shift for buying less expensive brands, but a prominent 6 point gain in buying other brands on sale. It is possible that in the case of durables consumers are more hesitant to try a cheaper brand but are still looking to save money by buying premium brands when they are on sale.


comScore, SymphonyIRI
Losing money to other brands? Invest in your brand. Decisions should be focused on spending wisely, but too often companies do nothing at all. A company’s typical reaction to a slowing economy is to cut back and wait things out. Ironically, those companies end up damaging their most valuable assets—their brands. Actually, research concerning economic depressions reveals some interesting findings:

1.5 point increase in market share among businesses increasing ad spending during recessionary periods (Cahners)
2.5 times increase in market share vs average of all businesses in post-recession period for those who aggressively increased media expenditures during last recession (CARR Report)
256 percent relative sales growth for businesses which maintained or increased media spend over those who did not (McGraw-Hill research analysis)

In times of recession it is better to tighten the belt and cut marketing and branding expenditures. However, when companies cut their outreach, they also begin to cut the ties that bond consumers to those brands. For smart companies, opportunity beckons. As we see competitors cutting back, we must now recognize that is the time to strike. If funds are too tight to make an all-out attack,we should just cut less than the competitors. Remember, in a recession both our marketing money and our message go further.

Consumers and Cost Control

Recessions usually trap brands between low priced competition and rising raw material costs.  Faced with narrowing margins, such brands may consider raising their unit prices, reducing the quantity or size of the product, or reducing the quality of the ingredients used.  Consumers-respondents in the aforementioned survey by comScore were asked to choose between these three options.  Specifically, they were asked, "Which action would you most want your preferred brand within each category to take, if it had to take a cost controlling action?"

Consumers prefer, if necessary
Consumers  indicate a preference for quantity reduction vs the other stated alternatives.  However, this strategy is not without risk. One additional question in the survey explored the reported effect that this downsizing of products had on consumers‘ buying behavior.  Four out of five respondents indicated they had noticed product downsizing in the categories they regularly shop. Perhaps more concerning, more than half of the respondents reported occasionally changing their behavior.  Thus, while consumers claim to prefer product downsizing, it does appear to have at least an occasional effect on brand choice for many shoppers and should be approached with caution.

Conclusion

Finally, brands can win economic depressions by successfully differentiating their product versus lower priced competitors in order to maintain preference and reduce price sensitivity of consumers. Decades of research on advertising have demonstrated that the use of brand differentiating messages is highly effective at increasing preference for the brand. Therefore, to optimize the impact of continued marketing support during hard economic times, advertisers need to make sure their efforts are effective at differentiating the brand from the competition. Yes, i know, Porter is always right!