Ebb and Flow

It was just last summer when Target Stores was the dream retailer, sending hoards of unwashed shoppers into stores and on-line clamoring for Missoni products. Now, as the first Holiday season sales numbers are reported, Target did not meet 4th quarter growth expectations, proving how quickly fortunes can shift.

Last summer, auto sales were still sluggish. Now, auto dealers are claiming excellent November and December sales. Do you think it was the big red bows on those Lexus cars?

As frugal consumers remain cautious, unemployment stays high, and foreclosures are expected to rise – and all in another election year – we are seeing less trend analysis and more ebb and flow motion in the economy. Current economic factors have reduced the size of our wallets, forcing individual consumers and businesses to think hard about how and where they spend their money. Frugal consumers are one of the most important factors affecting America’s uphill battle of breaking out of the recession, according to International Business Times. Many Americans are increasing their savings, consuming less, and are carefully determining the right places to spend their precious dollars.

This week’s AH-ha! moment suggests that marketing strategy has to factor variables that include starts and stops in brand growth – what we call the ebb and flow evolution.
Consider the restaurant industry – it has struggled throughout the Great Recession as consumers changed their dining patterns. However one category segment has steadily bucked the downward trend and that is the upscale fast-casual restaurants. You’ve dined in many of them – formerly known as adult fast-food – these are chains such as Panera, Chipotle Mexican Grill, Noodles & Co., and upscale burger chains like Five Guys.

These chains follow our Sixth Star marketing strategy, based on comments by NPD analyst Bonnie Riggs. “They’ve delivered on consumer’s value expectations far more than most fast-food places,” she said.

Panera was one of the early evolutionists and they made new rules for the segment. They keep making new rules, introducing a loyalty initiative based on demographic and sales tracking. They use e-mail and social marketing to stay well connected with their patrons. Contrast that with Taco Bell, Subway and Wendy’s, who continue to rely on new product innovations promoted by mass advertising.

Creating the right marketing strategy has to recognize that sales growth will come from a combination of product evolution and service evolution in order to effectively address consumers’ value expectation. The ebb and flow happens because consumers’ value expectations change, competitive responses are faster than yours and the natural marketplace dynamics are difficult to read.

The Marketing Implications

Contrary to what some experts tell us, marketing tends to be slow at innovating. We talk about the need to focus on value expectations and that may be one of those marketing speak terms that the rest of the organization does not grasp. As a result, we continue to repeat the same old Friends and Family or Customer Appreciation sales as ways to discount our way to growth and profitability.

We continually talk about being relevant and delivering relevant messages and while that is critically important, our second 2012 NEW RULE is to be useful. This is not a twist on an old theme. It’s a new way of looking at your business. It’s a way of scoring how well consumers respond to your brand. It is obvious that products or services must be useful in and of themselves because if they are frivolous, unnecessary, or just nice to haves, they will be the first cut when consumers’ spending gets tight.

Equally important as product/service usefulness, the brand’s marketing has to be useful to COMPLETE the value expectation. Marketing has to be useful or else consumers won’t use it and will not pass its work along. With so much information available, people are overwhelmed and they need help in making purchase decisions. One retailer’s “How-to” video showing how to set up a home theater system helped win over customers and was instrumental in passing along referrals. In the B2B space, Intel scores a coup with their “live chats” with IT professional because the callers can discuss more detailed information that could never be included in the selling materials. Chipotle created an iPhone app for pre-ordering. Great Clips has an app for reserving your spot in line for the next haircut. We’re not sure how well some of these apps will succeed, but at least they show marketing innovation and expand the idea of value expectation.

Marketing’s early 2012 challenge has to be to look at their plans and evaluate if the new rules we are proposing are actually being implemented. Marketing also needs to address the challenge of organizational barriers that are stifling speedy and collaborative innovation. Marketing has to open a new analytically based creative lens into the marketplace and guide the process to re-evaluate how the brand or organization goes to market.

Done correctly with input and buy-in from everyone in the organization, marketing can positively influence the ebb and flow of marketing and organizational innovation.
This week, send your team out to find the barriers to marketing innovation (internal and external). Send another team to determine what value expectations consumers expect. Open a dialog to craft a new strategy before the diaper on the 2012 baby dries. You only have 356 days left to make a positive marketing impact to influence the next sale. Don’t wait.

Bart Foreman and the Group 3 Marketing Team.