How marketing is changing
The pace of change is accelerating and how you keep up with this change is more challenging.
The complexity of engaging customers and understanding customers is changing. You know you have more data over you're in the insight business. To some extent, I
Marketer level of control over the selling environment– a good change
- One of the main lessons in my discipline is that the environment matters. what does the environment mean? It means the layout of your refrigerator and the layout of the supermarket. But it also means the layout of things in in the online world. The way we process information is very determined by what we see, familiarity, easier choices, default options.
- In the physical world my ability is limited. I can send you our wallet, but you decide what cards to put in in what order, where to put the cash.
- If I create a digital wallet or store, we have much more control. the online world has created a tremendous amount of opportunity. to create a different decision-making environment and one that we can control, direct and tailor better, in other words, marketers can now better target and tailor their story to individuals.
More competition – a bad change for marketers
- On the bad side, the competition is also increasing in all kinds of ways. if you're in my physical store, I know you're paying attention. If you're online. I don't know what else is going on. I have less control. So, we have more control, but we were losing some.
People are becoming less trusting, more suspicious, less open to sharing what they're thinking and feeling, and so it's harder to get insights. If you have a message from the FDA or a figure of authority, it's not the same as it used to be. People are.
screening out more stuff and saying I don't believe it. Their openness to trust Information is lower. We are in a crisis of trust. People used to sit on in the couch and watch television and believe what they saw, and now they go in with a negative mindset and disbelief.
- Data vs. theory
A lot of things used to be driven by theory, a theory of clinics, auctions, romantic clubs, shopping and so on. And now you have data that is not just at the level of the outcome, what ketchup people are buying, but at the level of the process. Suddenly, we are data-driven rather than theory driven and of course we find that lots of our theories ae not correct.
- Difficulty in understanding data
The downside of data-driven is there's a lot of data, but marketers still need to understand what an action means. Data allows you to watch people pick up the bottle, put it down, buy something else, but you still must understand the behavior. What's the GPS for that? He has said: “Big Data is like teenage sex. Everybody talks about it; everybody thinks everybody else is very good”. We have a lot of data but making sense out of that data is very complex. It's a harder task to make sense of lots of data than of a little data.
Barriers to entry and copycat
it used to be., when he was at Unilever, if you invented a better mousetrap, had a better product, it would last for a long time. ”But now you know, you have 10 minutes before everyone else has copied you. you can't just go to the playbook from last year and do what we did last year but add a little top spin. The speed of copying is much faster and creates a real problem.”
Marketing comes into product development too late.
The tragic mistake of marketing is it often participates too late in the process. Somebody has created a product that marketing then is told to sell. That's not marketing’s real role. The real role is to understand consumer preferences and demands and design things for them. Marketing can do this better than anyone else in the company. The marketing function is not broad enough and it needs to go much earlier in the in the product design process. The problem is that often people don't have the skill for that, and so they're not asked. it's kind of a chicken egg.
How to understand consumers
- Multiple levels of needs
It requires research skills that allow you to think about multiple levels of needs and how you can fulfill them. For example, we have a need to walk around the world and feel that we're in control and that if something bad happens, we can ask for help. That feeling gives us energy and confidence and willingness to take risks. If you are running a coffee shop, you might not fulfill the full range of human needs with a cup of coffee. But you can provide somebody that. Is my coffee person, who knows what I want and notices when I'm not as happy and asks me if I want a cookie today. Whether it is Facebook. Airbnb or Starbucks, Airbnb., it is about translating the offer to meet peoples’ deep need for resilience.
- Research for this
We need to learn how to separate the things that we can ask people and they can tell us from those they can’t.
- Sometimes it’s about asking professionals. For example, he is asking professional athletes what they enjoy about exercise. For most people, it's a miserable thing. But professional athletes learn how to enjoy it. You can go to the professionals and ask,” what's the essence of the joy?” One runner he talked to told Dan how he notices how his leg is hitting the pavement and he's trying to change it in small ways and control it.
- There are things that nobody can tell us and we must invent new ways to. to measure. Big Data can help, “Let's say you asked me how to sleep better. If I have access to all the person’s sleep data from their watch, I can analyze it, tell you where you did better, and identify things you haven't tried: temperature, lavender smell, eye covering, whiskey before sleeping.”
- You can conduct. experiments that allow you to go outside of the existing data. invent an alternative reality and test it.
- Importance of rituals
The wine industry has stumbled on a new consumption vocabulary. Dan was in Napa and yesterday went to a conference at a very fancy winery. They gave a funny talk about the land and the three different types of soil in different areas and how this creates a balance and so on. They've created the language of tannin, complexity, acidity. We stop, and we pay attention., it's just placebo, but we enjoy it much more. It's rituals. Starbucks is the same. People are consuming the story and the language, and Starbucks gets their attention. You can drink coffee without paying attention to it, and you can drink coffee paying attention to it. And it's very different.
Other things that can help marketers succeed for the future—unconstrained thinking.
People have thoughts that are too timid in general. He tells his students,” Don’t take constraints into account, go full into it as if there is no control. The constraints will come later. Don't start thinking practically.” People are too practical in their brainstorming. Don’t worry about whether it is legal or immoral. Start by taking the idea to an extreme and then dial it back.
For example, if you were a bank, you could tell people that unless they save at least 5% of their paycheck, they can't be customers of your bank.
Go into marketing, without blinders on and fear; go in as if you've just landed on the planet. We are so used to legal and political constraints and so on that we start the thought process from the wrong place. Don’t worry about looking silly in front of your boss or not being efficient.
The role of social science in marketing.
We need to start more from basic principles. For example, they did an experiment to get very poor people in Kenya to save some money. They tried all kinds of promotions, matching, reminding them about their kids and so on. The thing that worked the best was a coin with 24 numbers written on the edges. We asked them to put the coin somewhere in their hut and every week scratch that coin with a minus if they didn't save and up and down if they saved. That coin did better than a 20% match. Why? The real issue with savings is it's an invisible activity, whereas my new iPhone, is visible. There's a big difference between invisible and visible. Financial products, savings, insurance, are invisible vs. visible things such as cookies, iPhones, cars There's a very unfair competition between the two of them, because of basic human behavior. You must make the invisible visible.
I do think that it's important to go back to the basics, particularly human behavior as a construct for marketing. Most people have gone to the tools and learned how to optimize media plans and not gone to first base.
How are consumers changing?
- The fundamentals are not changing. there are some superficial things that are for example:
- a big thing.
- the attention economy, another big thing
But it's not that people are changing, the environment in which in which they are operating is changing. The environment has more noise, more fake news. So, people are reacting to that. But if you look at our need for resilience or the importance of defaults or our search for meaning, those things haven't changed.
- An example: The cost of living has gone up a lot. Young people today in cities have no hope of buying a house. Getting a 30-year mortgage makes you a different person. Suddenly, you're more stable vs. living with roommates, not knowing who will leave next month. It doesn't make you a different person really, but it does change your circumstances such that you're thinking in a different way.
- When uncertainty is higher, resilience is lower, inequality increases or decreases resilience. All that creates needs for understanding the world that are answered by fake news and alternative narratives. But it's not that the person is different. You take the same person. You move them to a place where they have more resilience and a secure job, they will be just the same.
Opportunity to create trust
It's a very sad story because we depend on trust so much. But it means there's an opportunity for trusted services.
An example about building trust on fundamentals is how he helped Scott create an insurance company called Lemonade. Dan said insurance should be about trust. it used to be in the old days when it was a cooperative, but the moment the third party goes in, there's conflicts of interest. So, Dan’s business model for lemonade was a model with trust. Lemonade makes a fixed percentage. when you sign into lemonade, you pick a charity that you love. All contributions to, let's say the World Wildlife Fund are put in one pool. Lemonade always makes its fixed percentage, the rest of it goes to the pool. They pay claims and whatever is left is not Lemonade’s money, it goes to the non for profit. So, a regular insurance company gains if they don't pay your claim, Lemonade doesn't. If you cheat lemonade, you're not cheating your insurance company, you're cheating your favorite charity.
Dan Ariely, Allen Adamson and Joanna Seddon