Tuesday, February 28, 2006

Why Experience Truly Matters

Recently, at the National Library, I learnt a couple of new things about the importance of experiential marketing from eminent professor Bernd Schmitt. Let me summarize the key learning points for you.

The Five Dimensions of Experience

The essence of experiential marketing is distilling it into the 5 sensations, ie
- Sense
- Feel
- Think
- Act
- Relate

Customer Experience Management (CEM) is the process involved in managing these 5 sensations through integrating physical, emotional, psychological, communal, intellectual and even spiritual aspects of experiencing a brand.

Examples of Experiential Marketing

- Singapore Airlines new First Class which is a culmination of both actual behaviour AND image.

- The new iMAC's as well as both iPod and iTunes which not just serve marketing communication messages but evoke experiences.

- Apple's New Store incorporates Visually Driven Communications in each and every aspect; from architecture, design, events, furniture, Point Of Purchase materials.

- Starbucks Coffee which is about creating an enriching experience beyond just selling coffee beans (commodity), powder (product), and beverages (service). These and other similar brands position themselves as the '3rd Space' other than work and home.

- GE's newest tagline of “Imagination at Work”, with everybody doing it at their own work.

- UK Government’s Website which entails getting citizens involved in the act too, for example, getting them to contribute ideas for icons which best represent UK.

- Zankel Hall's “Contemporary Concert-going Experience”

The New Paradigm

1) Focusing on Customer Experience

2) Focusing on Consumption and Usage

3) Impacting both the Rational and Emotional side of customers

Strategic Experiential Modules (SEMs)

These are the modules of the mind highlighted earlier, ie Sense, Feel, Think, Act and Relate.

They also relate to using different experiential factors to engage your customers.

SENSE - The most basic involving taste, touch, sight, scent, and texture. This is also the aesthetics element, eg Godiva Chocolate, Starbucks Coffee

FEEL - This involves engaging the emotions of customers, eg AIG's "Life Story" campaign

THINK - A more intellectual sort of stimulation, eg Elite Designers Against Ikea, Apple, Samsung

ACT - Behavioural and action oriented, eg Nike's "Just Do It"

RELATE - More communal and bonding, with similarities to Feel, eg Patek Philippe's "Passing from Generation to Generation", Petrona's National Day Advertisements

Experience Providers (Ex Pros)

These are the factors which need to be defined as they impact upon customers and shape their perceptions of a brand. They are similar to the oft-touted "touch points" in branding methodology.
- Product
- Packaging
- Advertising
- Brochures/ Collaterals
- Store Environment
- Sales people
- Web
- Events

Eg. for tourists coming to Singapore, we need to blueprint the entire experience and touch points, not just focus on the end attraction (shopping centre, restaurant, attraction) itself.

The Experiential Grid

This is a way of mapping the SEMs with the Ex Pros. You align the SEMs on one axis and the Ex Pros on the other.

Different considerations are needed when applying the Experiential Grid, namely:

- Broadening versus Focusing
- Enriching versus Simplifying
- Intensifying versus Diffusing
- Connecting versus Separating

In other words, the degree of experiences in different touch points and their relation to each other should vary according to the product or service categories.

The CEM Framework

An important key point is that we should analyse the experiential world of the customer. In other words, go through the same thing which your customer does and jot down the thoughts, feelings and impressions.

Experiential World of the Customer

There is a need to consider the following contexts when devising an appropriate experiential strategy.
- Brand experience
- Product category experience
- Usage/ consumption situation
- Socio-cultural/ business context

The Experiential Platform

WHAT? Experiential Positioning

WHY? Experiential Value Promise (EVP)

HOW? Overall Implementation Theme

What truly works are things which are:


Internal Engagement

Critical to get employees and stakeholders into the act.

Eg Eli Lilly – Internal involvement through employee activities.

Steve Jobs, Oct 2004:

“Remember that “Think Different” ad campaign that we ran? It was certainly for customers, but it was even more so for Apple”

Friday, February 10, 2006

Die Die Must Innovate!

Attended a talk at SMU recently by a visiting Professor Thomas S Robertson, who is some fancy professor at Emory University.

Couple of interesting ideas about one of the most widely used marketing theories known as the Diffusion of Innovation. The premise behind Prof Robertson's talk was that Innovation must take off rapidly in order to succeed.

Essentially, in the continuum of innovation, there are 3 categories of innovators:

1) Enhancements - eg added functionality built into versions 2.0, 3.0 and so on for software.

2) Migrations - eg new generation of technology like High Definition TV.

3) Emerging Technology - completely new technology which makes previous versions obsolete, eg Digital cameras versus film.

The need for innovation is nicely summed up by Sony's President Kunitake Ando:

"I think Sony's mission is to make our own products obsolete. Otherwise somebody else will do it."

The key to making innovation work is to adopt a market driving mentality. In other words, we need to anticipate customer needs (market sensing) rather than engage in unending market research (although there is a time and place for that too).

Sometimes innovation fails. Often, the problem is not that the technology is lousy. Rather, it is the failure to look into other factors of market success. For example, suboptimal design decisions to prevent cannibalisation of existing products, or developing applications that are not geared towards customer needs.

Advantages of rapid take off for innovation?
1) Captures brand loyalty and establishes reputation.
2) Sets dominant standard in the industry.
3) Achieve sales and experience (or word of mouth) effects.
4) Capture sales and profits before competitors do.

Prof Robertson suggested a five-pronged strategy to ensure rapid take off in innovation:

1) Pursue Early Mover Advantages Early movers tend to enjoy a bigger market share. However, this does not mean you must be the first to embrace state-of-the-art technologies. Remember that Apple Newton was ahead of its time and didn't capture the same market share that a later player like Palm did.

2) Engage in Alliances No man is an island and similarly, no company can afford to go it alone. The trick is to either develop or embrace industry standards and create an entire system of complementary products. A good example is through licensing of technology.

3) Preannounce to Customers Microsoft does this very well, and uses it as a strategy to "freeze" its customers purchases of potential competitive products. Eg the announcement for Longhorn.

4) Understand the Flow of Influence in the Market This means to identify who the key movers and shakers of the market are, and work with value chain partners which have disproportionate influence over other accounts.

5) Manage the Market Penetration Process In the market penetration process, there are 4 steps, namely:

Awareness --> Interest --> Trial --> Adoption

To see where the gaps are, it is key to identify where the problems arise, be it in awareness, interest, trial or adoption. In other words, is it because awareness is low? Interest is lacking? Customers unwilling to try? Or they are not keen to be repeat buyers?

The final takeaway that I got was that innovation is in anticipating the future while driving the market. Most innovations will fail if there isn't a suitable fit between technology and application. Innovation can happen in minor or major ways.