Marketing and innovation share a fundamental connection which is woven into their essence. There are two ways that you can create value in the marketplace, you can either find out what people want and work out a really clever way to make it, or you can work out what you can make and find a really clever way to make people want it. The financial outcomes stemming from either trajectory are remarkably similar, blurring the distinction between the two processes, so it isn’t necessary to introduce a new product to perform research and development (R&D). An additional method of R&D lies in reshaping an existing product or service through diverse strategies like presentation, pricing, positioning, or framing, which may alter its market perception and relevance.
No one cares
Economics has created the idea that all marketing does is add a little bit of magical added value. I think that you can have the world’s most brilliant product or service but if you don’t market it well, I mean, present it to people in a way that conveys conviction, plausibility, and trustworthiness, then it doesn’t matter how good it is. Economics assumes that there is already perfect knowledge and trust, but in reality, without building trust and marketing, even the best product or service might go unnoticed and unsold.
Let’s break it down
Artwork by Rvasilovski
Value creation extends beyond efficient manufacturing of predefined goods as one has to understand that a very large part of economic value is created in the mind and not in the factory. I think marketing is as much a source of value creation as manufacturing, unfortunately not everyone shares this perspective. There are many thinkers who believe that value is inherent and can be manufactured with increasing efficiency. I contend that true innovation lies not only in altering the products themselves or the means of production but also in reshaping people's perceptions as I believe innovation and marketing are fundamentally two sides of the same coin. And there are only two ways that you can create new economic value - you can either find out what people want and work out a clever way to make it or you can work out what you can make and find out a really clever way to make people want it. What do you think?
The rhythm of loyalty
Marketing often involves embracing counterintuitive approaches, and one of the challenges in marketing is the necessity to incorporate elements that defy conventional logic. It's essential to continually test unconventional strategies, as your competitors may not be doing so. Rather than immediately altering the core reality of a product or service to enhance consumer perception, consider the intricate layers that shape how people perceive, interpret, and emotionally connect with that offering. I think the process is multifaceted, involving the objective essence of a product, the context in which it's placed, the perceptions that arise from that context, the emotions or meanings derived from those perceptions, and the emotions ultimately driving consumer behaviour. Unlike the neat and predictable mappings seen in physics, human behaviour encompasses a more complex, non-linear journey through several stages. One has to recognise and harness the complexity of human behaviour and perception can be a key to successful marketing, even if it requires embracing counterintuitive strategies.
The story of Willie Sutton
A journalist asked the infamous Willie Sutton, “Why do you rob banks?” and he answered, “It’s because that’s where the money is.” Another journalist asked him, “Why do you rob banks with a machine gun?” and he answered, “It’s because they won’t give you money when you show up with a great personality.”
The story of Willie Sutton and his responses to journalists offers valuable lessons for businesses and marketers. Much like Sutton targeted banks because they were where the money was, it's crucial for businesses to focus their messaging on the audience most likely to be interested in their product or service. This highlights the importance of identifying a target market and concentrating efforts on reaching it effectively. Sutton's consistent use of a machine gun to achieve his goal also underscores the value of straightforward and consistent messaging, which helps build trust and credibility with an audience.
Good, better, best
Image © Maria Hergueta for Harvard Business Review
I think in the age of mass marketing, well-promoted average products or services consistently outperform their counterparts that lack extensive promotion. The key lies in crafting a compelling story that resonates with our target audience in an inspiring and persuasive manner which will encourage them to share it with others. If we can achieve this then we have done a good job of effective marketing.
““It’s not the story that you tell, it’s the story that you sell that really makes all the difference.””
Adapt and evolve
The Butterfly Effect is all about how small changes in a complex system can equal results that are virtually impossible to predict. What might seem like a very small and insignificant change in one place could result in large differences somewhere else or at a later stage. Having the same metrics and the same incentives and the same bonuses across the board in a business can be detrimental. I think it’s more beneficial to segment and measure various activities differently. One of the drawbacks with uniformly applying efficiency metrics is that it discourages innovation and risk-taking. For example, if the goal is a modest 4.5% annual improvement, individuals may avoid bold initiatives because success poses challenges and failure brings its own set of problems. Therefore, I think it’s essential to establish distinct metrics and incentives for various marketing activities as there are the things where very small changes make very, very big differences.
NB. The complexity theory recognises that economic and organisational phenomena are similar to those observed in science and in nature.
Aspirational choices
Businesses tend to become less risk-averse when they are confronted with a crisis, as the saying goes, 'necessity is the mother of invention.' Consumers also develop a narrative explaining why they are adopting new behaviours. Periods of disruption, although they introduce variance and instability in the economy, can potentially be healthy in the long-term. I think that the obstacles to technology adoption primarily stem from psychological hurdles, and this is why I find marketing fascinating, as it poses the challenge of converting people in the first place.
““When you have to make a choice and don’t make it, that is in itself a choice.””
Evaluating digital performance
What damage is caused by using bad metrics in digital marketing?
To improve the impact of digital marketing and undo the damage caused by using inadequate metrics, we must find a high-margin, transactional product to sell and market. Currently, a major issue with e-mail marketing is the optimisation around transactional metrics rather than emotional metrics. It’s important to point out that learning from digital marketing mistakes is not always easy or straightforward. I think it’s essential to exercise caution in this aspect and change our focus towards emotional engagement in order to obtain more effective results.
“Making mistakes is something everyone does. Learning from them is not. ”
Wider performance marketing
To improve the impact of digital marketing and undo the damage caused by using inadequate metrics, we must find a high-margin, transactional product to sell and market. Currently, a major issue with e-mail marketing is the optimisation around transactional metrics rather than emotional metrics. It's essential to exercise caution in this aspect and shift our focus towards emotional engagement for more effective results. I think one should find an high margin, transactional product to sell and market, and then use good metrics to optimise its performance.
Dear marketing leaders
You have often heard the advice to "build your brand" and "tell your story.” What if your customers simply don't care? The truth is, what truly matters to them is themselves – their problems, their needs, and their aspirations. In reality, they aren't as invested in your brand or your story as you might think. So, instead of solely focusing on pushing your brand and narrative, it's essential to shift your approach. How? By understanding your customers' perspectives and catering to their specific needs and concerns is crucial. By empathising with their challenges and offering solutions that genuinely resonate with them, you can create meaningful connections and foster brand loyalty.
At the end of the day, I think successful marketing is about putting the customer first, addressing their pain points, and demonstrating how your product or service can improve their lives. So it makes sense to redirect your marketing effort towards delivering real value to customers and building lasting relationships based on trust and understanding.
Shaping the future
As time goes on, an increasing number of business inquiries will shift towards behavioural and psychological aspects. I think this shift is due to the growing recognition that relying solely on past data to forecast future behaviour is becoming less reliable. Consequently, a significant portion of business inquiries will essentially transform into marketing questions, and as a result, it will become essential to give marketing a higher priority in the business hierarchy. The significance of marketing in terms of driving innovation and facilitating change has now been amplified by a factor of five.
Performance is important
Humans have developed the ability to make decisions based on selecting the option with the least catastrophic worst case scenario. This decision-making process involves taking a modular approach, addressing one stage at a time. Additionally, if a product can be easily reversed, removed, or sold, it becomes psychologically easier for the consumer, even if the product itself remains unchanged. I think in today's world, the role of marketers has become increasingly crucial and this demands that both their status and influence should be elevated. Understanding the desires, needs, motivations, and fears of consumers should be of paramount importance, it’s ten times more significant in 2023 compared to 2019, and the reasons for this heightened significance are widely known.
““It’s impossible for a man to learn what he thinks he already knows.””
Elements of value
The value pyramid is usually represented in building blocks and fall into four different categories: functional, emotional, life-changing, and social impact. The elements of value pyramid are a marketing tool that identifies the key elements customers value when choosing to buy goods and services. I think organisations can leverage this tool to improve the customer experience, target specific psychographics, and increase their value proposition.
Good judgement
Understanding how to solve the environmental crisis and over consumption is through the knowledge that the human brain itself has quite a large marketing function. Everybody can acknowledge that the brain has an accounting function as it cares about the efficient use of resources. It also has all kinds of algorithms and heuristics that are in many cases innate and built in, but it also has a marketing function. It really cares about image and status, effectively what something you do means to other people. I think it’s very difficult to produce magic in the world of physics or engineering, you can genuinely perform magic with perception. And one of the cleverest reframing’s you can do is make it a choice not to compromise.
The emotional component of experience
What is value to your end consumers?
I think the value to the end consumers lies in the authentic meaning attached to a product or experience. In other words, rather than simply buying something for what it is, people buy what it means because that’s what generates an emotional response and provides genuine significance. This deep-down authenticity of motivation is particularly good news for smaller companies because it can give them the freedom to do something truly innovative and distinct. Nowadays, consumers are increasingly drawn to the intangible aspects of a transaction, I mean this is beyond the straightforward exchange of goods or services. And what makes meaning particularly valuable is that it doesn’t require substantial resources to produce compared to actual substances, making it a more sustainable and impactful element in business interactions. Contact me via e-mail to arrange “an intangible value” workshop for your organisation.
Comfortable decisions
There are only two ways you can make meaningfully make money. You can either find out what people want and work out a really clever way to make it or you can work out what you can make and find out a really clever way to make people want it. I think the most successful goods are a combination of the two, for example, (something totally unwanted becomes desirable due to the workings of marketing) - at the other extreme you have commodity goods that people want at the beginning and your job is simply to provide them as cheaply and efficiently as possible. Very few things lie at those extremes, most things are a combination of essentially understanding human needs and also understanding how you can present what you make in a way that makes it likeable. I think most really successful inventors and entrepreneurs are also great showmen and salesmen. For example, Steve Jobs, Elon Musk, Thomas Edison, they are people who not only know how to make clever things, but they also know how to sell them.
““There are only two things that add value, marketing and innovation, everything else is a cost.” ”
Material vs. psychological value
Is economic value material or can it be psychological?
Economic value can be both material and psychological, depending on the context and perspective. In the traditional sense, economic value is often associated with tangible and measurable factors such as physical assets, goods, services, or resources. The psychological aspects of economic value are driven by individual or collective beliefs, preferences, and emotions. I think the next burst in economic growth will be driven by improvements in marketing efficiency, specifically resulting from in academic research in psychology, human behaviour, anthropology, and behavioural economics.
Lifestyle and behaviour
I like what I sell and love what it does for my customers. I’m now in the process of digging a little deeper to map out my customer’s psychographics:
⁃ What are their values?
⁃ What are their spending attitudes?
⁃ What makes them excited and what makes them tick?
#ThrowbackThursday
Why should buyers choose you?
There are certain things that are commonplace in every industry:
1) You rely on customers and clients for your success, and
2) You will have competitors.
Creating perceived value is subjective and depends on individual perceptions. Even if a product or service offers great features or benefits, its value is only meaningful if it is perceived as valuable by the target audience.
I think that understanding consumer psychology and using data to uncover insights about preferences and motivations will help businesses create perceived value in the minds of their customers. Effective marketing, branding, and communication strategies can influence perception and enhance the perceived value of your product or service. Contact me via e-mail for a confidential meeting about your organisations value proposition.
““The essence of power is the ability to define someone else’s reality and make them live according to that definition as though it were a definition of their own choosing.””