December 2007

IN THIS ISSUE

A Letter from CEO Michael Dunn

In a Web 2.0 world, when customers – not marketers – are increasingly the ones in the driver’s seat, the ability to develop the kind of deep insights into what motivates them is ever-more critical.

Gathering these insights requires evaluating and employing all the tools in the marketer’s toolbox, both traditional and new. It’s also critical to find meaningful and authentic ways to partner with customers for deeper and broader perspectives. And it takes a shift in the marketer’s own perspective to bring about a better balance between the art and the science of marketing.

This issue of our newsletter focuses on customer insights, and how marketers should be looking at the challenge of gaining them and putting them to better use.

Kevin O’Donnell discusses the challenges of connecting with customers without intruding on them in today’s always-on world, suggesting a shift toward “Using Communication’s Negative Space.” A new voice to our newsletter, Erik Long, suggests that “quantilitative” research may be the new methodology for gaining customer insights in “‘Quantilitative’ Research: New Platform for Customer Insights.” Finally, Scott Davis helps marketers think about data versus insight in “The Data/Insight Balancing Act.

As the holidays and New Year approach, please accept our wishes for a happy, healthy, and prosperous 2008.

Best,

[Signed, Michael Dunn]

Michael Dunn
CEO & Chairman
m_dunn@prophet.com

Using Communication’s ‘Negative Space’

By Kevin O’Donnell, Senior Partner

With customers almost always accessible in today’s increasingly connected world, the temptation facing many marketers is to find any way to get into their space. But that shouldn’t be the strategy of choice. Selectivity is critical in building a brand, and picking the right time and place to interact – or allowing the customer to do so – is instrumental.

In this environment, marketers are well advised to follow the lead of visual artists, who understand how to use “negative” or unoccupied space around an object to create greater impact. For marketers, that means finding unexpected and unobtrusive ways to interact with customers and build the brand.

To learn how creative marketers are doing it, and Kevin’s suggestions on ways to do more than merely break through the clutter, click here.

‘Quantilatative’ Research & Beyond: New Platforms for Customer Insights

By Erik Long, Associate Partner

Web 2.0 is doing a lot more than just facilitating exciting new ways to establish a brand’s relevance with customers. On the marketing science side, it’s behind an equally exciting morphing of methodologies and how we use them that promises to redefine the capabilities in the traditional analytics toolbox.

Call it a more integrated approach to research. Or “quantilitative” research. Either way, it translates into a happy marriage of the “old” qualitative and quantitative pieces, but powered by the Web to create broader new platforms to develop customer insights.

Here’s how to think about it. Two major concerns of marketers on the analytic side are their ability to do both strategic customer segmentation and behavioral targeting. Traditionally, you would first undertake the segmentation part of the puzzle, then move from there to behavioral targeting to refine your focus, and finally to qualitative concept testing.

How much more value would you get out of doing them concurrently? Is there a way to do it to not only innovatively generate insights but at the same time build a greater sense of community around the brand?

We’re starting to see some exciting new Web-enabled tools emerge that accomplish all this. Numerous businesses, for example, are tapping into Communispace’s private, online customer communities, which offer multiple ways to establish meaningful dialog with and among customer segments and lend enhanced insights to marketers – all in real time.

A pioneer, Hallmark used it to facilitate the “Hallmark Idea Exchange” among 200 young mothers who help brainstorm ideas and act as a sounding board for the retail buying experience. Kraft utilized a Communispace community to help it co-create its line of 48 South Beach Diet branded products that achieved $100 million in sales in the first six months. On the business-to-business front, CDW uses these communities to help it better understand how small and medium-sized businesses, and IT professionals make online purchases.

In this day and age, the challenge to marketers is to develop integrated insights that yield meaningful, impactful insights about the “who, what, when, where, why and how” about their customers and brands. Companies who use customer insights in a more iterative, “test and learn” manner, are well on their way to building the new insights platforms.

Erik Long is an Associate Partner who leads Prophet’s Customer Research & Analytics practice.

The Data/Insight Balancing Act

By Scott Davis, Senior Partner

It’s never been harder to be a marketer. CEOs want proof an initiative will benefit the bottom line, while a fragmented marketplace demands fresh strategies and innovations to drive growth.

Too many marketing executives suffer from analysis paralysis, and often ignore their well-honed instincts. They’re no longer anticipating customer needs that would build their brands. But those who combine gut feelings with hard data to uncover an unmet need can hit the jackpot.

Take Nintendo. Conventional wisdom held that Sony’s PlayStation and Microsoft’s Xbox were the undisputed video game powerhouses, building constituencies of young adults eager for graphic and technological advancement. Nintendo couldn’t compete on the graphics level, but recognized another opportunity. Players were getting older and seeking ways to transform video gaming into a more family-oriented activity. The Big Two weren’t addressing those needs.

Nintendo focused on the playing experience, not the games. Yes, research was part of the equation, but what drove the move was the company’s confidence in understanding its potential customers. Nintendo trusted its instincts that there was a larger market for video games beyond the hardcore fanatics.

Thus, Wii was born.

Using wireless, handheld controllers capable of detecting acceleration in three dimensions, Wii translates wrist and hand movements into onscreen action, a significant advance over traditional controllers using only fingers and thumbs. By being counter-intuitive and focusing on the game experience instead of flashier graphics, Nintendo created a hit with a far larger potential audience than its rivals. This year Nintendo products have outsold Xbox and PlayStation by substantial margins enroute to winning Nintendo Advertising Age’s Marketer of the Year award.

A heavier reliance on data is critical to the foundation of a more effective, customer-focused organization. But if it’s not balanced with an ability to uncover true strategic insights and shape the customer experience, marketers will miss out on the reason the research was undertaken to begin with: to break through the market clutter.

This article originally ran in Point.

Prophet Recommends...

Marketing Touchpoints - The UBS story  

By Inga Schmidt, Senior Associate

This article was co-authored with our client, UBS, and recently ran in Marketing Journal. It illustrates how active touchpoint management can help in converting prospects to clients, extending relationships to existing clients and therefore driving business results. *Please note this article is in German.

Innovation: Brand It or Lose It

By David Aaker, Vice Chairman

In this article from the Fall 2007 issue of California Management Review, David Aaker argues that brand strategy is crucially important to an innovation. Without it, the strength of an innovation will be short-lived. *Please note, there is a fee to obtain the full text of this article.

Turning Green Into Gold

By Andrew Pierce, Senior Partner

In this Oct. 1 story for Marketing News, Andrew Pierce explains why environmentally responsible initiatives need to serve the business, the brand, and the customer to succeed.

The CMO Challenge: Get Out of the Safety Zone

By Michael Dunn, CEO and Chairman

Don’t fear the challenges of new media. Embrace them, says Michael Dunn in a story written for the Financial Services Forum. Empowered CMO’s must be willing to break away from traditional marketing vehicles to better connect with consumers.

 

Most frequently downloaded from www.prophet.com

Brand Portfolio and Brand Architecture in Single Branded Companies

By Sarah Essex, Senior Partner

How can single-brand companies utilise brand portfolio and architecture to maximise business results?

 

Other articles of interest

Magic Shop
Fast Company, November 1, 2007
Day one at my new job. Sporting white headphones, I am plugged into a computer watching Ridley Scott’s awe-inspiring “1984” Macintosh ad, reviewing the company history, and getting pumped up about my new workplace. Like most of my coworkers, I’m already a loyal fan of the company, so starting this job will take my interest to the next level. I’m working as a Mac specialist at the Apple Store.

Take a Number, Southwest Fliers
Chicago Tribune, September 20, 2007
Kiss the cattle call goodbye, but get ready to take a number the next time you fly Southwest Airlines. The Dallas-based airline said yesterday that it will change the open-seating system that has been central to its maverick identity through 36 years in business by assigning numbers to position passengers in boarding lanes

The High Price of Rapid Growth
Advertising Age, August 20, 2007
Internet-based auto-insurance dealer Esurance has been on a growth roll: 40% from 2005 to 2006 and 70% each of the three previous years. Credit smart marketing, mixing online and smart TV spots with a stylized cartoon character — Erin Esurance, they call her. And this year? The company is deliberately slowing down. Why? Killer brand is great. Killer brand and hot growth are better. But growth can outpace a company's ability to maintain the experience consumers expect from a company or product.

For additional interesting articles and factoids on the subject of Innovation, check out Prophet’s blog — BackPocket.

News and Events

Congratulations to Dave Aaker for being named one of the top ten marketers by the elite Marketing Executives Networking Group in AdAge. Read the press release here.

In a recent issue of AdAge, Scott Davis discussed DDB's new community-focused approach to advertising, called “swarm communications.” Read his thoughts here.

We continue to sound off on brand and business issues in this opinion section of our Backpocket blog. Take a look at recent postings. Kevin O’Donnell examines how an overall innovation system should look, and what it should feature to work most effectively. Jesse Purewal looks at the risks RBK (Reebok) is taking in finding its way out of the middle of the running show market. Add your comments to continue the dialog!

 

Spotlight on Speaking

2008 CMO Leadership Forum
January 17 — New York, NY
Prophet is sponsor of this event, which boasts keynote speakers such as Dan Henson, Vice President and CMO, GE; David Lawee, Vice President of Marketing, Google; Richard Pilnik, Group Vice President & CMO, Eli Lilly & Co.; Peter Weedfald, Senior Vice President & CMO, Circuit City; and others.

HSM Innovation Forum
April 8-9 – New York, NY
Prophet is proud to sponsor this industry-leading event, featuring pioneers in the field of innovation including Chris Anderson, Eric von Hippel, Daniel Pink, Andrew Zolli, and others.

Best Practices in Marketing
April 21–25 — Zurich, Switzerland
Roland Bernhard will discuss innovation management and the latest trends in marketing at this event.


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