The Leading Online Newsletter for Marketing Education

 

ACTON Marketing, LLC Update

www.actonfs.com

 

Volume 3, No. 50, Monday, December 11, 2006

 

This is a serious educational newsletter devoted to the subject of marketing.  You can quickly and easily expand your marketing knowledge by devoting less than 59 minutes a week to reading the eight articles included in each issue.  By printing an issue, you can read it at your leisure.  For those who wish to read only certain articles of interest, use the table of contents as a guide.  So you can explore topics in greater depth, we include references that will lead you to additional resources.  Our goal is to make each of us a better marketer.

 

"Employ your time in improving yourself by other men's writings, so that you shall gain easily what others have labored hard for."  - Socrates

 

"Whoever knows only one direct marketing skill, whether it's art direction, copywriting or list management, does not even know that properly."

-- Martin Gross, freelance copywriter   

 

___________________________________

 

Inside this issue -

 

 

  •         Marketing to Women - More than a few women were shocked when they discovered the new women's magazine was titled pink.  Targeted at working women, it's an opportunity to study the marketing to women ads appearing inside.          

     

  •         Nonstop Networking - It's not about the food . . . it's about interacting with others at the same table.  This week Andrea Nierenberg shares some mealtime networking tips.

     

  •         Copywriting Insight - We can learn a lot by studying bad examples.  You'll be shocked by the bad example in this week's article.

     

  •         Focus on Design - They used to be called full-page magazine ads.  Now, the innovative ones are called "dimensional inserts."  See an example in this week's article and learn why more companies are relying on them to get their marketing messages out to consumers.    

     

  •         Marketing Terminology Made Simple - After reading all six installments, you'll have a better understanding of why so many new products fail.  Installment one begins this week.

     

  •         About Marketing ROI - The quest for more accountability in marketing spending is driving more companies to smaller agencies.  Details in this week's article. 

     

  •         Bank Marketing Research - If you believe most mass media advertising is credible, you might rethink your position after reading this week's article.

     

  •         Ask ACTON - Discover how one bank created its Unique Selling Proposition (USP) by taking its free checking account offer to the next level.     

     

  •         Why Read the Newsletter - Advice from David Ogilvy, one of the most famous names in advertising.

    ___________________________________

     

     

    Marketing to Women

     

    Studying the magazine ads that incorporate a marketing to women strategy is an excellent way to develop and improve your own marketing to women skills.

     

    But first, you need the foundation and you get that by reading both editions of Marti Barletta's book, Marketing to Women - How to Understand, Reach, and Increase Your Share of the World's Largest Market Segment.

     

    Having digested the wealth of knowledge in Barletta's books, you are ready to venture into the "real world" to see how the early adopters of a marketing to women strategy implement what they've learned from experts like Marti Barletta.

     

    Magazines - especially women's titles - are an excellent hunting ground.  Historically snubbed by male readers, women's magazines can be a treasure trove of marketing to women strategies and tactics.  They are "must reads" for men in marketing management and creative positions.

     

    Often late to the party, most banks appear to be slow at developing and implementing a marketing to women strategy.  On the other hand, insurance companies and other nonbank financial service providers are helping lead the way.

     

    Here's a full-page ad from AXA Equitable that appeared on page 31 in the October 2006 issue of pinkTM magazine.

     

     

    The Visual

     

    Since pink is a magazine for women in business, perhaps the visual at the top of the ad is appropriate.  It certainly catches your eye.  On the other hand, a photograph showing faces versus tops of peoples' heads would be more personal and engaging.  

     

    Which begs the question:  "Is it necessary to show a woman in a sea of men's heads to support the headline?"  Or for that matter, show a woman with any group of men? 

     

    Compare the large visual with the smaller photograph on the front of the free guide being offered responders.  Which do you find more realistic, friendly, and engaging?

     

    The visuals you choose are extremely important when marketing to women.

     

    The Headline

     

    Asking a question in the headline is an excellent attention grabber as most readers will read the body copy to discover the answer.

     

    Questions Make Great Headlines

     

    The article, "Nine Powerful Headline Strategies," by direct response copywriter and designer Dean Rieck, appeared in the December 2001 issue of insidedirectmail.

     

    Describing strategy #5, Rieck writes, "Pose a provocative question.  Asking a question directly involves your reader.  However, your question cannot be a random or clever one.  It must relate directly and clearly to the major benefit of the product.  It also must prod the reader to answer 'yes,' or at least 'I'm not sure, but I want to know more.'"

     

    You can read Rieck's entire article in the March 7, 2005 issue of this newsletter under the Copywriting Insight article.  Past issues of the ACTON Marketing, LLC newsletter are available free online at http://www.actonfs.com/newsletter_archive.php.

     

    The Body Copy

     

    Short and to the point, the body copy provides the answer posed by the headline question.  It doesn't talk down to women . . . in fact it complements them on their willingness to ask questions and "stay the course" in their investment decisions.

     

    The Offer

     

    This is an awareness/lead generating ad.

     

    What's being sold is the availability and expertise of the financial advisors working for AXA Equitable. 

     

    One of the best ways to boost response in a lead generating ad is to offer a free gift for responding.  In this case, the goal is to get women to either call or visit the AXA Equitable website for more information.

     

    Cleverly, the marketing folks behind this ad are offering a white paper which addresses and debunks 15 financial myths for women.  Who could resist learning what these 15 myths are so they can be avoided in the future?

     

    Satisfying curiosity will generate a much greater response than offering some bland brochure on the 15 reasons to have a financial plan or to meet with an AXA advisor.

     

    Now for the bad news!  On October 9, and again on December 1, 2006, your newsletter editor attempted to visit the website using the URL provided in pink type in the box at the end of the body copy.  Three attempts yielded the same results . . . the error message claimed there was no such website landing page.  Bad News for both pink and the folks at AXA Equitable.

     

    I immediately went to the pink website (http://www.pinkmagazine.com) and sent an email advising them of the problem.   

     

    In addition to the AXA ad above, other full-page ads employing a marketing to women strategy were placed by Canon, Dell, Mobile Edge (tote bags for business travelers), Hampton Inns, Citracal, and Albertsons (supermarkets).

     

    Men, you won't find many, if any, marketing to women ads to study in the magazines you tend to read.  So, if you are serious about honing your marketing to women skills, you better give some thought to buying a few of the many magazines targeting women.

     

    The bad news, pink and similar magazines don't come in plain brown wrappers so you'll have to quickly put them into your briefcase or carry them so only the back cover is visible.  Or subscribe to them using a name other than your own.

     

    A one-year subscription to pink will set you back only $19.95.  You can subscribe online at http://www.pinkmagazine.com. 

     

    Marketing to Women

     

    If you're still not comfortable with developing a marketing to women strategy for your company, everything you need to know can be found in just 300 pages.

     

    By reading both the first and second editions of Marti Barletta's book, Marketing to Women - How to Understand, Reach, and Increase Your Share of the World's Largest Market Segment, you will be equipped to develop a marketing strategy that will resonate with women - including PrimeTime WomenTM.

    __________________________________

     

     

    Nonstop Networking

     

     

    Networking meals . . . it's not about the food, it's about the networking opportunities.

     

    In this weekly article, you'll find valuable networking advice from Andrea R. Nierenberg, "The Queen of Networking."

     

    Nierenberg likes to think of networking "as the ongoing process of creating connections and nurturing relationships that benefit both parties over time."  You can start networking at any time and do it anywhere.  In fact, according to Nierenberg, most of us may already be doing it without realizing it.

     

    Part I of Andrea Nierenberg's second book, Million Dollar Networking, published in 2005, is about meeting people and establishing relationships and business opportunities.

     

    Chapter 3 is titled, "Techniques for a Successful Networking Event."

     

    This chapter is devoted to presenting all the techniques you'll need for a successful networking event.

     

    The second major subhead in Chapter 3 is "Arrival - Take a Deep Breath."

     

    Arrival - Take a Deep Breath

     

    Nierenberg writes, "You made it to the event.  You did your research; you have opening lines, small talk topics, and have polished your thirty-second infomercial.

     

    "Now it's showtime.  You're ready!"

     

    The networking techniques appearing under this subhead are:

     

    • "Introduce Yourself to the Host
    • "Get in Line
    • "Dive into a Group
    • "Start a Conversation with Your Dinner Partner"

    This week we'll cover what Nierenberg wrote about starting a conversation with your dinner partner.

     

    Starting a Conversation with Your Dinner Partner

     

    Nierenberg writes, "Look to your left.  Look to your right.  Your dinner partners could become important members of your network.

     

    "At a seated meal, use your ice breaker opening lines and your idea generators and start the conversation rolling.  As my dear friend, Jon, always says, business meals are certainly not about the food.  They are about connecting and learning from others.

     

    "At a long event, you'll have opportunities to speak with more than just the people beside you.  Here are a few suggestions to meet others besides those seated directly next to you:

     

    • "When there's a lull in the conversation, clink on a glass and suggest that the group introduce themselves to one another.

     

    • "Get up and walk around between courses to chat with other people at the table or around the room.

     

    • "Once everyone has finished eating, trade seats with the person next to you or with someone seated across from you, so you can get to know others at the table.

    "Of course, ask your dinner colleagues for permission to do this as a way for all of you to connect and meet several others.  You don't want to insult anyone by moving around.  People will probably be glad you were the one to take charge and create more interaction. 

     

    "You'll be the hero."

     

    This completes what Nierenberg covered under the second subhead in Chapter 3:  "Arrival - Take a Deep Breath."

     

    Next week we'll begin coverage of Nierenberg's third subhead:  "During the Event, Make a Connection and Plan to Follow Up."  The three networking techniques appearing under this subhead are:

    • "Listen and Learn
    • "Find Out Preferred Ways to Stay in Touch
    • "Have an Exit Strategy"

    Learn more about networking and Andrea Nierenberg by visiting her website at http://www.mybusinessrelationships.com.

    ___________________________________

     

     

    Copywriting Insight

     

     

    "Oh what a tangled web we weave, when first we practice to deceive."

    \ Sir Walter Scott (1771-1832), Scottish novelist, poet, historian, and biographer

     

    Sir Walter Scott's famous saying immediately came to your newsletter editor's mind after reading the following letter received by an ACTON Marketing employee.

     

    It's confusing letters like this one which reinforces the idea of "junk mail" in the minds of many consumers.

     

    The confusion starts with the teaser copy on the outer envelope.

     

     

     

    Having read the teaser copy under the postage indicia, most car owners would immediately open this envelope, believing it to be an important RECALL notice.

     

    The degree of confusion at this point is minor.  It's a "gotcha" experience.

     

    In fact, most car owners receiving this letter were probably relieved when they discovered it was not a RECALL notice but a special event sales letter.

     

    The more serious confusion takes place in the sales letter.  It begins with the statement "100% REIMBURSEMENT FOR YOUR TRADE*" appearing at the top of the letter in an area commonly known as "The Johnson Box."

     

    Note the pesky asterisk at the end of the promise.  The presence of an asterisk immediately causes one's brain to activate that silent voice inside all of us.  In this case it's telling us:  "Ah ha, there is a catch, I knew it." 

     

     

    But, even before getting to the mice-type conditions at the bottom of the letter, most GM car owners would ponder the exact meaning of a 100% reimbursement for their old car.  On the surface, this too-good-to-be-true offer sounds like letter recipients could expect to get the original cost of their used car as the trade-in value on a new GM model.

     

    A quick trip to the disclosure copy at the bottom of the page begins to clarify the promise of a 100% reimbursement.  Here we learn that:

     

    1.      The offer is good on only one trade-in.  That's not a problem.

     

    2.      Certain models are excluded.  Now that could be a problem as many models could be excluded, particularly those owned by most recipients.

     

    3.      The actual value of the trade-in will not exceed the current NADA book retail value.  Now that's clever wording meant to further confuse folks.  Why not use the term familiar to almost every car owner today . . . the Kelly Blue Book.  Who's heard of the NADA book? 

     

    Wow, already we've discovered that we won't be getting 100% of our original cost as a trade-in.  At best, we can expect a maximum of the retail value shown in the Kelly Blue Book.

     

    Okay, it's time to read the entire letter to see exactly WIIFM (what's in it for me?). 

     

    Note the bold type in the second sentence which reads:  "Any GM customer trading in a 1996-2004 vehicle on a like or upgraded 2006/2007 GM vehicle will receive 100% of the factory full base model MSRP when new! (as provided by N.A.D.A)."

     

    What gives?  This seems to contradict item #3 above.

     

    On to the second paragraph where we, again, discover that:  "All customers will receive 100% of the base model MSRP in trade toward a new Pontiac, GMC, Chevrolet or Cadillac." 

     

    We now hear that little voice inside us commenting, "That 100% reimbursement offer must be true as we've been told about it three times already.  That footnote must be wrong."

     

    At this point, we hold our breath as we go to the third, or last, paragraph.  Here we hope to see this fantastic offer repeated for a fourth time.

     

    Wham!  Bam!

     

    Now the ruse is uncovered.  Here we learn that:  "Obviously, your current vehicle must be in safe operating condition, with normal wear and tear and free of paint and collision work."

     

    This bit of copy leaves the auto appraisers at the local GM dealer plenty of "weasel room" to downgrade the value of our trusty trade-in.  The only vehicle to meet those requirements belongs to the little old lady who drives her car only to church and back on Sundays.

     

    But wait, it gets worse, much worse.

     

    In the next sentence we are told:  "The only deductions will be made for mileage ($0.10 - 0.45 per mile depending on model and reconditioning)."  What a shocker!

     

    A quick calculation confirms our worst fears:  Assuming we have 85,000 miles on our car, we can expect to lose an amount as low as $8,500 and as high as $38,250.  Immediately we tell ourselves that only the little old church lady gets the ten-cent figure.  For the rest of us, the forty-five cent amount will be used.

     

    Now for the laugh-out-loud line of copy:  "We are not going to 'nitpick' your trade-in, we are here to sell new GM models at prices that are much, much lower than you would normally expect."

     

    What a minute!  Didn't the copywriter just "nitpick" to death our trade-in in the third paragraph and the disclosure copy?

     

    At this point, recipients of this letter have absolutely no idea as to what value will be assigned to their trade-in.  All we do know is that the absolute most we could expect to receive is the retail value listed in the Kelly Blue Book. 

     

    And this amount is reserved for the one or two consumers with a mint condition, low-mileage trade-in . . . a car that would bring much more if sold by the owner.

     

    By now that little voice inside your head should be reminding you of the old axiom:  "If it seems too good to be true, it probably is."

     

    It's been said that "desperate people do desperate things" and based on this letter to GM owners, the folks at GM are desperate to sell cars any way possible . . . even if it means relying on confusing and contradictory copy to get current owners into the dealer lots.

     

    Never, ever, rely on confusing or deceptive copy to get consumers to respond to your offer.

     

    A single letter like the one sent to GM owners in September can do irreparable harm to your image and to your brand.

    ___________________________________

     

     

    Focus On Design

     

    You love to hate them.

     

    They're called "dimensional inserts!"

     

    Their goal in life is to draw attention to themselves by forcing the magazine to open on the page they occupy while being thumbed through by the reader. 

     

    An excellent example of such an insert appeared between pages 68 - 69 in the September 2006 issue of Ladies' Home Journal.  In fact, it was a four-page insert from Coldwater Creek, purveyors of stylish and affordable clothing for women.

     

    What made this a dimensional insert was the thin plastic wallet card worth $25, tipped-on to the bottom of page 2, as shown below.

     

      

    Perhaps the most annoying of these dimensional inserts was the ubiquitous Virgin Airways boarding pass on heavy card stock which seemed to appear in many different magazines earlier this year.

     

    Other dimensional inserts discovered this year while paging through magazines included the Alaska Surimi Seafood recipe cards, the Nissan trading cards, GM's holiday gift stickers, the Wild Alaska Salmon insert containing 20 removable fish stickers for grocery lists, and the actual yellow Post-it Notes and Flags affixed to both sides of a 3M insert.

     

    The $64,000 question is, are dimensional inserts worth the extra cost?

     

    The answer was discovered in the article by Ethan B. Goller, "Why Dimensional Inserts Work," which appeared in the September 11, 2006 issue of DM News.

     

    Goller writes, "I'm often asked, 'Why consider dimensional inserts over traditional "flat" ads?' 

     

    "It's simple.  They outperform.

     

    "A Time Inc. survey found that 91 percent of readers recalled the message delivered in a dimensional ad.  That's 51 percent more than can be expected with a flat [standard magazine] ad.  Given today's ad clutter, this rate of recall is more than impressive.

     

    "Flat ads typically provide a one- to three-second window to deliver a message.  On average, a dimensional product owns the viewer's attention for more than 45 seconds.

     

    "Another benefit is a dimensional insert's ability to 'break the book.'  When the reader thumbs pages, the publication typically opens to the dimensional ad because of the thickness of the insert.

     

    "But dimensional inserts require effective management and thorough attention to detail in planning and production.  By addressing production factors upfront, you can eliminate surprises that might hinder your campaign.

     

    "With dimensional inserts, it is imperative that you adhere to the publisher's binding specifications.  Most publishers require that you secure their approval not only of a comp representative of the insert, but one that confirms the size, weight, dimensions, safety and function as well as content.

     

    "Both form and content should be reviewed and approved by the publisher before going to press.

     

    "What's the most important step to ensure a smooth execution of a dimensional insert?  Testing, testing, testing.

     

    "Work closely with the publisher and partner with its binderies.  Pre-approval of the format is crucial.  Feedback from the binderies helps incorporate any necessary modifications to ensure smooth running during the bindery process.  This is particularly critical with the inclusion of non-paper components such as electronics or product sampling.

     

    "It's worth noting that the introduction of certain non-paper components may move the insert into the 'ride-along' rate classification.  With this, the advertiser would incur a per ride-along piece rate of $0.131, as specified in the Direct Mail Manual.

     

    "Though this surcharge is rare, many of the nation's leading periodicals offer the ride-along program as part of their standard price card for print advertisers.

     

    "Time and again, dimensional inserts have proven to be twice as memorable with readers than flat ads, something to consider when weighing return on investment for your advertising efforts."

     

    Ethan B. Goller is a principal and executive vice president of Structural Graphics.  To learn more about dimensional inserts, visit the company website at http://www.structuralgraphics.com.

     

    Previous newsletter articles on dimensional inserts appeared in the February 13, April 24, and August 21, 2006 issues under the Focus on Design topic.

     

    Past issues of the ACTON Marketing, LLC newsletter are available free online at http://www.actonfs.com/newsletter_archive.php.

    ___________________________________

     

     

    Marketing Terminology Made Simple

     

    It's called the "endowment effect." 

     

    It's a major reason why most new products struggle for acceptance, with many ultimately failing.

     

    The "endowment effect" was introduced in the article by John T. Gourville, "Eager Sellers & Stony Buyers - Understanding the Psychology of New-Product Adoption," which appeared in the June 2006 issue of the Harvard Business Review.

     

    In a prelude to his article, Gourville notes, "Many innovations fail because consumers irrationally overvalue the old and companies irrationally overvalue the new."

     

    We'll cover Gourville's article over the next six weeks in six consecutive installments.

     

    Gourville, an associate professor of marketing at Harvard Business School, begins his article, "More than a century ago, Ralph Waldo Emerson is reported to have said, 'If a man can write a better book, preach a better sermon, or make a better mousetrap than his neighbor, though he builds his house in the woods, the world will make a beaten path to his door.'

     

    "If only marketing innovations were that simple.

     

    "In today's hypercompetitive marketplace, companies that successfully introduce new products are more likely to flourish than those that don't.  Businesses spend billions of dollars making better 'mousetraps' only to find consumers roundly rejecting them. 

     

    "Studies show that new products fail at the stunning rate of between 40% and 90%, depending on the category, and the odds haven't changed much in the past 25 years.  

     

    "In the U.S. packaged goods industry, for instance, companies introduce 30,000 products every year, but 70% to 90% of them don't stay on store shelves for more than 12 months.  Most innovative products - those that create new product categories or revolutionize old ones - are also unsuccessful.

     

    "According to one study, 47% of first movers have failed, meaning that approximately half the companies that pioneered new product categories later pulled out of these businesses.

     

    "Consider three high-profile innovations whose performances have fallen far short of expectations:

     

    • "Webvan spent more than $1 billion to create an online grocery business, only to declare bankruptcy in July 2001 after failing to attract as many customers as it thought it would.

     

    • "In spite of gaining the support of Apple's Steve Jobs, Amazon's Jeff Bezos, and many high-profile investors, Segway [See sidebar on Dean Kamen's Segway scooter below] sold a mere 6,000 scooters in the 18 months after its launch - a far cry from the 50,000 to 100,000 units projected.

     

    • "Although TiVo's digital video recorder (DVR) has garnered rave reviews since the late 1990s from both industry experts and product adopters, the company had amassed $600 million in operating losses by 2005 because demand trailed expectations.

    Dean Kamen's Segway Human Transporter

     

    Here's what we wrote about Kamen's Segway in the November 15, 2004 issue of this newsletter under the Bank Marketing Research topic.  At the time we were presenting Jack Trout and Al Ries' 22 Immutable Laws of Marketing.

     

    Another good example of The Law of Hype occurred in late 2001 when inventor Dean Kamen finally unveiled his Segway Human Transporter named "Ginger" to the world.  Prior to the unveiling, there was tremendous hype about some "mysterious" new invention that would revolutionize human transportation.  The early hype was made possible primarily due to Kamen's notoriety as a very successful inventor in the field of medicine.   

     

    After the unveiling on December 3, 2001, over a period of several weeks Kamen and Ginger appeared on all the morning talk shows and every news program.  News anchors could be seen taking their first ride on Ginger.  From the hype it was easy to conclude that it was just a matter of time until the sidewalks of America would be crowded with consumers making their way to and from work on their own personal Segway Human Transporter.

     

    Ginger is the world's first self-balancing, two-wheeled, electric powered transportation machine.  She weighs 83 pounds.  Visually, Ginger looks like a giant letter "T" protruding from a small platform containing two rubber-tired wheels.  Her platform is just big enough for the rider's two feet.

     

    Ginger officially went on sale on November 18, 2002, when it was made available online from Amazon.com.  The company predicted it would sell 50,000 to 100,000 units in the first year.  After 21 months only 6,000 units had been sold and all were voluntarily recalled in September, 2003, due to a software malfunction that caused some riders to fall off their transporters.

     

    Many factors worked against Ginger's success including her weight, her $5,000 cost, the fact that you could not use her in the rain (unless you didn't mind getting wet), lack of secure parking at your destination, and possible city ordinances against riding her on the sidewalk.  Plus, it's unlikely older consumers would feel comfortable on such a vehicle. 

     

    We covered Dean and his invention in the July 12, 2004 issue of this newsletter under the Marketing Terminology Made Simple topic where we discussed Professor Philip Kotler's three different levels of marketing performance, one of which was "Need-Shaping Marketing."  In the article we stated:

     

    "Possibly the best example of need-shaping marketing today is the scooter, the Segway Human Transporter named 'Ginger,' that was invented and is being marketed by Dean Kamen, a multi-millionaire engineer and inventor.  He's faced an uphill struggle gaining acceptance for his innovative 'people-mover.'  Not only has he been on many major network television shows giving demonstrations, he's having to convince many government agencies to approve its use on sidewalks all over America.  At one point he convinced the U.S. Postal Service to test his scooter in their large postal facilities."

     

    An excellent article on Dean Kamen and his Human Transporter, "Dean Kamen - From Ginger to Segway," by Mary Bellis, is available online at http://inventors.about.com/library/inventors/blkamen.htm.  To learn more about Dean Kamen and his many inventions visit his website at http://www.dekaresearch.com.

     

    Segway Recall Announced September 14, 2006

     

    Adding insult to injury, on September 14, it was reported that the maker of Segway was recalling all 23,500 human transporters shipped since its introduction.  A software glitch was causing the scooter's two wheels to reverse direction unexpectedly, throwing its rider to the ground.  Among the users are 150 police departments around the world.

     

    "After the fact, experts and novices alike tend to dismiss unsuccessful innovations as bad ideas that were destined to fail.  But surely that's too simple an explanation.  If these innovations are so misguided, why isn't it obvious before the fact?

     

    "Webvan was backed by seasoned retailers, executives, and investment bankers, but it was nonetheless a spectacular failure.

     

    "While the Segway and TiVo stories have yet to play out fully, both company executives and industry analysts were far more optimistic about those innovations than they should have been.

     

    "Why do consumers fail to buy innovative products even when they offer distinct improvements over existing ones?  Why do companies invariably have more faith in new products than is warranted?

     

    "Few would question the objective advantages of many innovations over existing alternatives, but that's often not enough for them to succeed.  To understand why new products fail to live up to companies' expectations, we must delve into the psychology of behavior change.

     

    "This article presents a behavioral framework that explains why so many products fail and outlines some actions that companies can take to improve their chances of success.

     

    "New products often require consumers to change their behavior.  As companies know, those behavior changes entail costs.  Consumers incur transaction costs, such as the activation fees they have to pay when they switch from one cellular service provider to another.

     

    "They also bear learning costs, such as when they shift from manual to automatic automobile transmissions.  People sustain obsolescence costs, too.  For example, when they switch from VCRs to DVD players, their videotape collections become useless. 

     

    "All of these are economic switching costs that most companies routinely anticipate.

     

    "What businesses don't take into account, however, are the psychological costs associated with behavior change.  Many products fail because of a universal, but largely ignored, psychological bias:  People irrationally overvalue benefits they currently possess relative to those they don't. 

     

    "The bias leads consumers to value the advantages of products they own more than the benefits of new ones.  It also leads executives to value the benefits of innovations they've developed over the advantages of incumbent products.

     

    "That leads to a clash in perspectives:  Executives, who irrationally overvalue their innovations, must predict the buying behavior of consumers, who irrationally overvalue existing alternatives.

     

    "The results are often disastrous:  Consumers reject new products that would make them better off, while executives are at a loss to anticipate failure.  This double-edge bias is the curse of innovation."

     

    The rest of the article is presented under the following five subheads:

     

    1.      "The Psychology of Gains and Losses

    2.      "Building a Behavioral Framework

    3.      "Balancing Product and Behavior Changes

    4.      "Accepting Resistance

    5.      "Minimizing Resistance"

     

    Next week we'll cover what Gourville wrote about the psychology of gains and loses.

     

    Harvard Business Review

     

    Reprints of Harvard Business Review articles are available, online, for a fee at http://www.hbr.org.  If you wish to obtain a copy of Gourville's article, request Reprint R0606F.

    ___________________________________

     

    About Marketing ROI

     

    ROI tip of the week: Select a small, boutique agency if you want accountability for how your marketing dollars are spent and you desire quantifiable results.

     

    The large, mega-agencies love spending your precious marketing dollars on massive branding campaigns but have no way of proving your money is well spent.  In fact, the majority of these campaigns fail.

     

    For proof, look no further than General Motors and Ford.  Or the massive effort on behalf of Delta Airlines' ill-fated Song venture.  If all these expensive branding campaigns worked, we wouldn't see major companies struggling to maintain market share, reporting stagnant or falling revenues, and reinventing themselves.      

     

    On the contrary, look at the success of Starbucks, which spends very little on mass media advertising.

     

    Accountability is the subject of the article by Lucas Donat, "Accountability Fuels Boutique Boom," which appeared in the September 11, 2006 issue of DM News. 

     

    Donat writes, "Let's say you have a million-dollar ad budget burning a hole in your pocket.  You have a choice:

     

    • "Go to a large ad agency and spend it on a campaign that is entertaining but offers no way to quantify results.

     

    • "Go to a response-oriented boutique ad agency and spend your money on a brand-building campaign that also offers accountability and instant quantification of how your ad dollars are turning into revenue. 

    "OK, you're saying, this is not much of a choice.  That's why you're seeing a trend in smaller, boutique ad agencies that offer clients creativity plus accountability.  Merely triggering a response falls short in a world in which consumers increasingly click to buy.

     

    "The goal no longer is direct response, it's direct action - not just intent to purchase, but an actual purchase.

     

    "Accountability is the watchword now as mainstream marketers seek a positive return on investment for their advertising.  In the former world of advertising, large agencies usually were brand-centric.  They didn't want their creativity constrained by accountability.

     

    "Enter the boutique ad agencies primed to provide clients with talent and experience in a leaner, results-oriented agency model.  Smaller has become better as the boutiques spearhead an industry shift by committing to improving a brand's retail performance.

     

    "That's why you hear the buzz about ROI-positive advertising, where brand meets results.  Amid increasingly fragmented delivery channels, it's never been more crucial to be able to measure success, dollar for dollar.

     

    "And it's usually the smaller, boutique agencies whose staff can do just that.  Why?  An owner or senior partner will oversee your account with a vested interest in your success.  At the larger agencies you get talent, but rarely is your business served by someone whose own bottom line is affected by the success of your ad campaign.

     

    "Everything is on the line.  Your success is their success.  They can't afford a misstep with your advertising.  And they can't afford to be unable to prove it's driving positive ROI.

     

    "So what is ROI-positive advertising?

    • "It's a high-concept creative ad with an immediate call-to-action.

       

    • "It drives consumers to call or log on and, most importantly, to purchase.

       

    • "Results are trackable and quantifiable, dollar for dollar.

       

    • "ROI-positive campaigns result in a positive return on every ad dollar spent.

       

    • "Brand awareness is built through the frequency afforded by increased media budgets that are rapidly scalable due to positive ROI on every media dollar spent.

    "It's no longer 'Show me the money' in advertising.  Make sure your agency can tell you where it's coming from, too."

     

    Lucas Donat is a founding partner of Donat/Wald, a small, boutique ad agency in Santa Monica, California.

     

    ROI Insight - It's often difficult to determine the return on investment for a particular marketing program or campaign.  It was first said by soap marketer Lord Leverhulme and later by John Wanamaker, the famous Philadelphia department store owner.  Expanding on the observation, Wanamaker was once heard lamenting, "I know that half of my advertising is wasted, but I don't know which half.  I spent $2 million for advertising, and I don't know if that is half enough or twice too much."

    ___________________________________

     

     

    Bank Marketing Research

     

    Mass media advertising . . . does it really work?

     

    As a consumer, do you believe in most advertisements?  Some?  Any?

     

    Isn't it odd how we'll not believe what others say in their ads but will believe in the credibility of the ads we spend money to create and run?

     

    Perhaps the most controversial book ever written on this topic hit the bookstores in 2002.  The Fall of Advertising & The Rise of PR was written by the father/daughter marketing consulting team of Al and Laura Ries.

     

    If you haven't read this fascinating book, you should add it to your "must read" list.

     

    "Advertising and Credibility" is the title of Chapter 8.

     

    Credibility is at the heart of the advertising controversy.

     

    The Rieses write, "The local diner that advertises 'finest in food' on its marquee has a credibility problem.

     

    "The billion-dollar corporation that spends $2 million on a Super Bowl spot has exactly the same problem, although it might not recognize it.

     

    "Exaggerated claims and excessive volumes are contributing factors to the decline in advertising's effectiveness, but credibility is the fundamental issue.  No matter how creative the advertising, no matter how appropriate the medium, there is just no way around the issue of credibility.

     

    "An advertising message is perceived to be one-sided, biased, selfish, and company-oriented rather than consumer-oriented.  Ask yourself, do you believe what you read in advertisements?  Most people don't.  As a result, most people don't read advertisements or pay much attention to radio and television commercials either.

     

    "Actually, it's worse than that.  In a certain sense, every advertising message implies the opposite of what the advertiser intended.  In some situations, this 'implication of the opposite' is so strong that the advertising can actually harm rather than help the advertiser.

     

    "Let's say a seafood company runs an ad that says, 'Tests show Super Seafood is absolutely safe to eat.'  What would a reader think?  'People must have gotten sick eating Super Seafood, otherwise they wouldn't have run an ad like that.'

     

    "Making It Right

     

    "Who ran this ad:  'Making it right.  You have our word on that.  When you buy tires, you're not just buying rubber and steel . . . you want the confidence that your tires will get you to your destination - safely.  Your safety is our primary concern.'? 

     

    "It wasn't Goodyear, Goodrich, or Michelin.  They don't need to run advertisements on tire safety.  The public has no reason to believe that their tires are unsafe. 

     

    "It was Firestone that ran the 'Making it right' advertising campaign.  But you already knew that because of the extensive publicity.  'Tread Failures Lead to Recall of 6.5 Million Firestone Tires,' said the headline of an article in the New York Times.  'Facing 50 lawsuits, 46 deaths, 80 injuries, and a federal investigation, the company said it would provide free replacements for the 6.5 million tires still on the road.'

     

    "The naïveté that pervades the advertising community is enormous.  After fifty lawsuits, forty-six deaths, eighty injuries, and a federal investigation, we're going to solve Firestone's problems by running an advertising program that says don't worry about the safety of Firestone tires because we're 'making it right'?

     

    "The implication of the Firestone advertising, of course, is just the opposite.  'They must be worried about the safety of Firestone tires, otherwise they wouldn't be running a multimillion-dollar ad campaign on the subject.'

     

    [Editor's note:  Oddly enough, this wasn't the first recall of Firestone tires.  In 1978, the nifty set of Firestone 500 tires on your newsletter editor's Mercury Cougar were among the 8.7 million 500 tires voluntarily recalled.]

     

    "Quality Is Job 1

     

    "For over a decade, Ford has been saying, 'Quality is Job 1.'  Do customers believe that Ford makes better quality cars than its competition?  Research says no.  Among the big carmakers, Ford ranks lowest in terms of quality. 

     

    "In fourteen different car and truck categories, according to the latest J.D. Power & Associates survey, not a single Ford brand was in the top spot on 'initial quality.'  In the same survey, the Ford brand was rated below average in 'customer service.'  Nor did the Ford brand make the top ten in 'sales satisfaction.'

     

    "The message (quality) might be right, but the messenger (advertising) is wrong.  Advertising has no credibility.  Advertising is not believable because consumers perceive it to be biased.  Advertising is the voice of the seller.  To the prospective buyer, advertising has no objectivity.  There's no way for a consumer to independently verify the accuracy of what an advertisement claims.

     

    "There have been so many outrageous advertising claims that most people consider all advertising 'puffery.'