The Marketing Musings of Donna Karan

May 31, 2010

When you think of Donna Karan, you think of fashion, right? Right, but Karan, known most for her Donna Karan, DKNY and Urban Zen brands, should also be known for something else:  Marketing savvy.

Donna Karan: CMO Marketing Advice

At a recent M50 CMO Summit I attended, Donna Karan talked at length about her business philosophy and passions. And, while she wasn’t talking directly about Marketing, she had some important things to say about it.

Marketing Musings — Donna Karan

1.  Work Where the Consumer Is – Donna started her talk by stating that she spent her formative working years working in a clothing store. There, she could observe consumers firsthand in all clothing dimensions:  looking at clothes, trying them on, walking in them, doing mirror evaluations, etc.

She literally lived with her consumers day in and day out — and developed an instinct for consumers and what they wanted. Here’s how she responded to the final question in the Q&A session:

What one piece of advice would you give CMO’s ? She replied: “Understand your consumer.”

Understanding Consumer Behavior: Critical to Marketing ROI

2.  Celebrate Artistry & Creativity – Of course artistry and creativity are central to the fashion business and Donna Karan’s success. But what about Marketing? Marketing is moving toward greater measurement rigor and increasing use of ROI metrics, as discussed in “The Genetic Markers of High Advertising ROI Brands” — so her advice is timely and important.

Artistry and creativity are also central to Marketing success; artistry and creativity are the wellspring and driving force for the transformation of mundane Marketing strategies into engaging and exciting Marketing — and terrific ROI results. CMO’s would be smart to remember this when they’re reviewing their metrics and dashboards.

3.  Look for the “Void” – What’s the “void?” The void for Donna Karan is the big unmet consumer need. She described it in almost mystical bright white light terms; the void was something she could see, focus, and lock onto, with laser like intensity. No focus groups or 1:1 interviews, no satisfaction studies, no product testing, no consumer research of any kind.

Sometimes you need to trust your gut instinct about what you need or want that’s missing in the market (for more on marketing innovation, see my post ““Leading Your Brand Beyond Marketing.”). If you’ve lived and breathed a business for some time, your gut instincts are often right on target–so trust them. Donna Karan trusted hers, and built a great brand from doing so.

Innovative Thinking Leads to Robust Marketing Plans

4.  Use World Cultures as Inspiration – World cultures are the inspiration for many of Donna Karan’s designs–particularly in her Urban Zen Foundation work. Donna talked about her interest and love of Balinese culture, along with the aborigines in Australia.

There’s an important learning for CMO’s here. It’s the power of sourcing your Marketing ideas from everywhere. Search and reapplication, best practices, whatever you call it, identifying great marketing ideas–wherever they’re created–and exporting them around the world is one of the smartest, cheapest ways for CMO’s to build the business.

Global Thinking Expands Marketing Capabilities

5. Make a Difference on the Outside and the Inside – With Urban Zen, Donna Karan focused increasingly on meeting both the external needs of consumers, but also their internal needs. She believes consumers want to be “conscious consumers” and engage with brands that make a difference socially.

As the world becomes more open and transparent, consumers are more networked and up to date than ever before. They often know the good and bad things about your brand before you do–and they increasingly know your company’s position on a range of economic, social and environmental issues.

In this environment, it’s increasingly important for brands to stand not just for an important functional benefit, but to also stand for being a brand that consumers can believe in–whether that’s being environmentally friendly, etc.  CMO’s need to define not just the functional benefits for their corporate brands–but important emotional ones as well.

Success = Understanding and Practicing Marketing Fundamentals

What struck me most about Donna Karan was that she really “gets” Marketing, even though she’s not a trained Marketer by profession. And this just confirms for me what I’ve always believed: most successful people inherently understand and practice the fundamentals of great Marketing.

Follow Randall Beard on Twitter

Get free updates of Randall Beard’s Blog by e-mail

Get free updates of Randall Beard’s Blog by RSS reader

Advertisements

Using the Tidal Forces of Category Dynamics to Build Your Brand

May 24, 2010

Momentum can be a powerful thing, especially when it’s on your brand’s side. I’ve worked on numerous brands over the years, and seen firsthand the effect of both positive and negative momentum.  

Almost every Brand building article or book I’ve ever seen focuses on the fundamentals: defining your brands positioning, delivering a product or service that’s truly differentiated, communicating effectively with consumers, etc.  

Category Marketing Insights Build Brands

However, virtually none of them address the effects of your category’s dynamics on momentum. These dynamics are like the tide and can either make your brand’s growth easy or challenging depending on their direction. Momentum comes not just from your brand, but also your category.  

Category Dynamics

1.  Category Growth Rate – This is the most obvious metric that people focus on. Is the category growing, flat or declining ? This factor alone has a huge impact on brand growth. The E-Reader category is growing fast, so most E-Reader products benefit. On the other hand, the Travelers Cheque category is declining, making it virtually impossible for American Express or any other brand to grow volume.  

e-Reader Category Grows: iPad & Kindle

2.  Category Penetration – Category penetration is the percentage of consumers who use the category. The absolute level of penetration, along with the penetration trend over time, provide a snapshot into the potential for growth or decline. A low, but growing penetration rate indicates lots of growth upside–a likely situation facing the e-Reader category. A high, but stable penetration level — like paper towels or laundry detergent — suggests little growth opportunity.  

Laundry Detergent Category: High Consumer Penetration

3.  Category Heavy User Momentum — Not all consumers are the same within a category. Understanding the status of “trend setter” and “heavy user” groups is particularly important for insight into category health. If the percentage of heavy users in the category is increasing, this signals a healthy category and suggests consumers are finding new and more useful ways of using category products. If heavy user category penetration is declining, it suggests consumers are finding preferred alternatives to your category and reducing share of requirements.  

Soap Category Characterized By Heavy Users

4.  Category User Concerns — What are category consumers concerned about? Are there non-brand specific concerns about the category that suggest future changes in category consumption? Category specific research can identify and isolate consumer concerns that are contributing to the exodus of households or heavy users. Examples would be food categories where consumers have growing health concerns, etc.  

User Concerns Such As Healthy Eating Impacts Category Growth

5.  Category Leakage — If the category is declining, and consumers are leaving the category, where are they going ? Every category is like a glass with a hole in the bottom; consumers are being “poured” into the category (usually as consumers age into the category), but consumers are also flowing out of the bottom thru the hole. The relative rate of pouring and leakage is a large factor in whether the category water line (e.g. volume) is rising or falling.  

Understanding which categories, if any, are benefiting most from category “leakage” is an excellent diagnostic which can sometime provide insight into new product opportunities. Conversely, if your category is growing, where are consumers coming from?  

Category Dynamics — An Overlay to Brand Building

Most brands spend all their time understanding their brand position and not nearly enough understanding category dynamics. Your category is like the tide; and ideally your brand is swimming with it, not against it. Understanding category growth, penetration, heavy users, category concerns and leakage provides an excellent diagnostic framework for understanding category health and your brands challenges and opportunities.  

Follow Randall Beard on Twitter  

Get free updates of Randall Beard’s Blog by e-mail  

Get free updates of Randall Beard’s Blog by RSS reader


Guest Post: The Future of Media Research

May 17, 2010

This post is part of a continuing series of guest posts. Louise Ainsworth, Managing Director, EMEA, The Nielsen Company, looks at four scenarios for the future of media research.

The media industry has been subject to massive disruptive influences in the last ten years and they seem set to continue. Any attempt to predict the future of the media and advertising ecosystem or the future of the research industry that supports it is likely to fail.

Media Disruption — How To Measure in the New World

However, we can think about the underlying forces and influences at play and what are the likely outcomes of each, leading to scenarios which help us frame decision-making. Some possible future scenarios include:

1. New Media, New Metrics

Technology and platforms are evolving and will continue to evolve to allow audiences to extend media consumption throughout their day and find the best available screen. New kinds of research are needed to understand audience behaviour, attitudes and response in this new world.

In some cases, these new approaches require new scientific understanding, such as neuroscience, or rely on the development of measurement technology in line with new platforms as usage extends to 2, 3 or even 4 screens. In other cases, these new metrics reflect different and innovative applications of well established academic thinking or traditional research, such as behavioural economics, currently a hot topic in the UK.

Social media has also fundamentally changed the way that audiences communicate with each other and the way that brands can reach out to them.

Recent analysis by The Nielsen Company shows how viral media can inflate not only the reach of a campaign, but also the impact. Audiences trust recommendations from a friend more than any media communication. A recent study conducted jointly by Nielsen and Facebook showed how ‘friends’ becoming fans of a brand provides both organic reach and also significant shifts in brand awareness and consideration.

Difference between control group and exposed

A recent review provided another illustration of how new metrics are needed to grasp the meaning of how new media impacts campaigns around the Super Bowl. In this review, Nielsen developed a blended media score to evaluate the performance of campaigns across paid and earned media, including audience response and viral impact. The chart below shows how some advertisers were better than others at ‘earning media’.

Earned Media

2. Less is More

An alternate view is that the proliferation of platforms and metrics only serve to confuse and make it harder for marketers and agencies to make allocation decisions. Whilst in some cases allocation and targeting can increasingly be automated, major advertisers are looking for simple approaches and metrics that can be applied consistently when they are comparing across platforms.

The demand for, and success of, UKOM illustrate this – the reality is that to understand and evaluate the internet in comparison with other media, advertisers required that an internet planning currency was established. This has now been adopted by more than 30 publishers and more than 30 of the UK’s leading agencies. UKOM is providing the UK online media industry with an opportunity to finally engage with the IPA TouchPoints survey and provide a valuable source of consistent evaluation.

In several examples, clients also seek to find consistent metrics across multiple markets and all media. They do desire a GRP that compares across 4 screens and across all markets. The following article, Integrated Measurement and the Pathway to Profitability, looks at one way of evaluating a cross-media GRP.

3. Response Data Complements Audience Ratings Data

One opportunity to unify advertising research across platforms is to focus on the impact on audience response, advertising recall, changes in behaviour and ultimately revenues.

Advertising is increasingly targeted and evaluated on the basis of which media contexts and creatives have been most successful in driving response metrics including propensity to buy. Services such as Nielsen IAG offer clients the opportunity to compare performance of TV advertising with online advertising.

TV vs online advertising

The more granular the data, the more meaningful the evaluation, and this kind of evaluation, particularly on offline purchase, will rely on highly granular data in media and purchase behaviour. This type of analysis will help us better understand how & where the ‘new media ecology’ will eventually settle out to and how we should frame future resource allocation.

4. Privacy Prevails

The last scenario, and the one which offers the least opportunity, is the ongoing threat of increasingly stringent privacy legislation. This presents a more sobering prospect for the industry of increased restrictions on the flexibility of publishers, networks and also researchers to monitor and respond to the behaviour of the audience with increasingly targeted and relevant offerings.

Advertisers and publishers, as well as researchers, may lose out on the opportunity to generate more value for the industry by improving the efficiency of advertising. Providing consumers with a clear and valuable exchange (for instance, more relevant, salient advertising communication) for their disclosure will be a critical requirement for the industry.

The call to action for the media research industry here is to ensure that we take this issue seriously and self police effectively. Privacy remains paramount and the research industry must lead the field in ensuring we maintain high levels of security and anonymity in personal data handling.

Of course, it’s likely that elements of all of these trends will be evident in future market spaces. All provide a different set of challenges and opportunities for media, advertisers and researchers alike. One thing is certain, those that succeed in this future will be those that frame their decision-making through an awareness and understanding of these contrasting forces and influences at play.

********************************

Follow Randall Beard on Twitter

Get free updates of Randall Beard’s Blog by e-mail

Get free updates of Randall Beard’s Blog by RSS reader


Put Social Context Where It Matters Most – Next to Your Advertising

May 10, 2010

I was in Bangalore, India last week, and it seemed that cell phones were everywhere.  Increased cell phone penetration — now estimated at over 500 million — and the ability to access the web cheaply and from anywhere, is driving rapid change.  In fact, a headline in The Economic Times read:  

“TWEET EQUITY:   Consumers are exchanging notes online, even posting complaints on the CEO’s Twitter page, leaving companies with no choice but to rethink strategies in a world where consumer behaviour is being driven by online exposure.” 

Buzz Builds the Social Media Ecosystem

The social media phenomenon is global, there’s no doubt about it. “Earned” media (e.g. user generated reviews, blogs, organic search, Facebook fans, Twitter followers, etc.) continues to increase in importance, no matter where brands reside.  And as I’ve written about before, traditional “Paid” media (e.g. traditional TV, Print, paid search, etc.) is still viable.

So the bigger challenge for Marketers today is how to integrate the two into one larger Marketing communications interlocked plan. To do so, Marketers need a much better understanding of how they influence each other.

Questions About Earned Media

I talk to leading CMO’s, Media Heads, and Heads of Research and Insights at major CPG companies on a frequent basis. Virtually all of them believe that earned media is growing in importance, and probably impacts other paid elements of their Marketing mix, but few have the research to really know for sure.  

Questions I routinely hear include:  

• What’s the real value of a Facebook fan?  

• Do positive blog posts make my advertising more effective?  

• Does advertising drive more positive buzz?  

These are great questions, but unfortunately, they’re mostly just that–questions without answers. This is changing, however, as new research sheds light on how social media affects traditional paid advertising.  

Facebook Fans: Build Value through Social Media

Measuring the Impact on Paid Advertising

One recent example is the initiative by Nielsen and Facebook to study the impact of social context on ads placed on Facebook (Disclosure: I work at Nielsen).  

Nielsen and Facebook surveyed over 800,000 users, about 125 Facebook ad campaigns and 70 brand advertisers. Users were grouped into a control group (no ad exposure), a standard ad group (exposed to the ad only), and an Ad + Social Context group (exposed to the ad and the fact that their friends were fans of the brand–see below).  

The Value of Facebook Ad Impressions (image from Nielsen Wire)

Key Learnings – Where’s the Biggest Impact ?

The basic Ads on Facebook drove higher recall, awareness and purchase intent than the control group not exposed to ads. And, as you would expect, the ads with social context around the ads drove better results than the ad only group.

 

   

No Ad Control  

   

Ad on Facebook  

 Ad on Facebook with Social Context

 Index Context Ad vs. No Context Ad  

Ad Recall

100  

110  

116  

1.6x 

Awareness

100  

104  

108  

2.0x 

Purch. Intent

100  

102  

108  

4.0x 

What’s more interesting to me is this:  the results from having ads + social context improve as you move down the Marketing funnel from ad recall to purchase intent. That is, the ads with social context achieved 4x the purchase intent of the ads with no social context, while they recalled only 1.6x better. 

It seems that positive earned media, in this case knowing that “your friends are fans of the advertised brand,” makes more people notice your advertising, but has the greatest impact on the most important metric prior to purchase: Purchase Intent. It’s the power of an indirect recommendation from people you know. 

Putting the Learning Into Action

So, now we know that social context makes advertising more effective. The next obvious question is how brands can get more of it. And then CMO’s will have a new challenge: getting positive earned media where it matters most–next to their brands advertising.  

Follow Randall Beard on Twitter  

Get free updates of Randall Beard’s Blog by e-mail  

Get free updates of Randall Beard’s Blog by RSS reader