Appreciating Non-Rational Customers

I recently spoke to a group of architects and engineers.  They were talking about the need to expand the installation of solar water heating and photovoltaic panels in Hawaii. 

The conversation reminded me of some research we did at Ogilvy & Mater related to a solar installation marketing program we were managing for Hawaiian Electric.  The client had all kinds of data about how much money the customer would save by installing solar.  Those rational claims got translated into rational advertising focused on money.  They didn't work very well. And the client was perplexed.  Why weren't these systems selling better?  What rational human being would NOT install solar when it paid for itself and, in fact, would save them tons of money over time? 

The answer, of course, is that humans are not rational, at least they're not rational all of the time.  They're not necessarily crazy, just non-rational.

To delve into the problem we conducted some qualitative research.  What we found was that customers understood the money saving story.  They got the joke, so to speak.  They just didn't want the hassle of doing the installation.  With that bit of understanding, we focused on a target that didn't have that objection.  We did a direct marketing campaign aimed at people who already had a building permit.  If the objection is that I don't want the noise, dust and hassle of a solar installation, let's talk to people who have already decided to put up with that.  The result was a higher incidence of purchase as customers simply added solar to the remodeling project they were already doing. 

Dr, Steuart Henderson Britt

One of the great teachers in my life was Dr. Steuart Henderson Britt.  He was a psychologist by training, but he trained us to think like social scientists to delve into the real motivations for consumer behavior.  Think like an anthropologist to understand cultural motivations.  Think like a sociologist to understand societal norms and mores that drive behavior.  Think like a psychologist to recognize the inner workings of the mind and how they affect purchases. 

Dr, Britt was a wonderful teacher.  One of the things I remember most was that he put a jar on the desk in front of the class ... and we had to contribute a quarter every time we said "I think ...."  It's not what I think as a rational marketer that's important.  It's how the customer behaves.  And that behavior is often driven by non-rational motives.

Greed. It's what kills the Golden Goose

I have been a paid member of the United Airlines Red Carpet Club (now the eponymous United Club) for many, many years.  I have dutifully paid annual dues - now $500 for individuals and $750 for couples - because I received a value commensurate with the price.  What I value is a quiet oasis in the middle of chaos.  And that, to me, is worth the price. 

A few years ago, some brilliant marketer decided to change the model.  In addition to selling annual memberships at a fairly high price (and resulting in some feeling of exclusivity), the airline now offers one time passes for $50 per entry.  So, unless you're flying more than 10 segments a year, you don't have a good reason to buy the annual membership.  I suspect the airline will see an erosion in membership as a result.  What's worse, by offering an inexpensive entry to the hoi polloi, the club has 1) become more crowded and chaotic, and 2) has lost its cachet as something special.

I'm sure that the person who suggested this based the recommendation on the premise that it would increase volume.  And it did.  The clubs are very crowded - but at the cost of eroding the brand and its margins.

The same thing can happen with many products and categories.  Stanley Plog wrote a wonderful book titled "Leisure Travel" all about marketing destinations.  In it, there's a wonderful chapter titled "Why destinations decline and fall and nobody does anything about it."  The problem is over-development and the motive is greed.  Hawaii's Waikiki resort area was greatly overdeveloped ... and the cost of redevelopment has been high (but necessary to make the destination attractive again).

I guess the moral of the story is that you need to watch the diet of your golden goose. 

Hooters: A Great Place for the Whole Family

In the "what were they thinking" department, Hooters, the puerile purveyor of titillation as a condiment, targeting the forever-adolescent has announced that it is remodeling its restaurants with an eye to developing the family market.  Really.  Here's the story.  Now, I have nothing against puerile purveyors of titillation.  They've clearly developed a brand and segmented the market to appeal to the forever-adolescent.  But, if they think they can expand the brand to capture the family market I think they're going to, uh, go flat.

Some brands can be extended.  Dove soap can extend to moisturizers, because that's related to Dove's core brand.  Hawaii can extend its vacation brand to the honeymoon market, because they're related, too.  It's much harder for Hawaii to extend its brand to attract business meetings because the imagery for business is clearly separate from the brand imagery of a Polynesian paradise.  And Dove may run into trouble as they've tried to stretch the brand into the men's moisturizing market.

When you name a chain of restaurants "Hooters" and you are known for your scantily clad waitresses, you've pretty much cast the die.  Changing Hooters is a little like Harley Davidson saying "you meet the nicest people on a Harley."

If Hooters proceeds with this, they'll face two big problems.  First, families are not going to have Hooters top-of-mind when it comes to a family night out.  That's one.  Second, if they are successful in attracting families, they're going to turn off their core, testosterone-drenched customer base.  It's a lose-lose.

There's another adult brand that famously attempted to extend the brand into the family market:  Las Vegas.  The brand of showgirls and casinos decided to go after the family market for a brief period.  I was talking to one of the Vegas marketers about their initiative and why they abandoned it.  He said, succinctly, "we consider family to be the "f" word now."  Clearly, what goes in Vegas is adult fantasy, not family entertainment.

Yes, Virginia, There IS a Hawaii

I know it's a pet peeve of mine ... but here's another example of an organization using a graphic of the United States without Alaska and Hawaii.  This time, though, it's the Democratic party.  Shouldn't THEY know better??? 

When New Things Become the Norm

Here's a flash from Marketing Week's blog:

'Digital marketing' to become just 'marketing' in 2013

Wed, 9 Jan 2013 | By Lara O'Reilly

Digital is set to lose its prefix and just be referred to as “marketing” this year as all marketers’ output will become “inherently digital” over the coming months, Forrester predicts.

The research company forecasts that digital budgets will become 20 per cent of the total, accounting for about $50bn (£31bn) worldwide.

I predicted something like this a while ago based on an "ancient" precedent.  In the 1950s, many advertising agencies had departments of television ... because the medium was so new and radically different that they thought it required an organizational slot.  Of course, over time, television became another tool in the marketing toolbox ... and the departments of television disappeared.

Now we're seeing the same thing happen with "digital marketing" as the world of digital matures.  I think this is a good thing.  It causes marketers to focus on the fundamentals (branding, positioning, targeting) rather than technique.  

Post Industrial Thinking

When I learned marketing (as the earth's crust was cooling) we were taught all about mass.  Mass production, mass communications, mass markets, mass distribution. 

The foundation for all this "mass"ive thinking came from developments early in the twentieth century.  This thinking was neatly summed up in a book I'm reading (The Vertigo Years) about the early decades of that century:

A central paradox governed the relationship between the individual and his or her new power to choose in a consumer society:  while mass production furthered not only membership of a tribe, but also personal, individual choice as an assertion of personal preference and taste, industry itself depended on looking at people not as individuals, but as types, as averages.  For managers and product planners no individuals existed but only budgets, sizing charts, bell curves, fashions, markets.  Marketing and advertising worked to close this gap.  They associated perfectly anonymous products with faces, gave them a personal appearance, a little homely warmth.

Mass production drove branding ... to create personalities and brand types that the "tribe" could identify with. 

My how things have changed.  The unthinkable is happening in the post-industrial world.  Mass is no longer the fundamental driver that it was.  Small is the new big.  The customer of one is a possibility.  We can communicate with ... and develop products for ... and distribute to ... individuals. 

Marketers in the post industrial age need a post doctorate in this new marketing reality.