India’s retail boom is driven by a plethora of reasons–from increasing disposable incomes and changing lifestyles, to growing demand in rural areas and smaller towns, and the rise of the global consumer. Indeed, global retail giants are trying to tap into this vibrant market but their core business model seems to be failing their aspirations.

The reason behind this change—the unique purchase drivers of the Indian consumer. Think–Value for money (through deals and bargain-hunting), convenience (e.g., deep rooted system of home delivery of purchases) and relationship based customer service (legacy of “kirana” or corner stores).

So, to survive and grow in such a market what are retailers doing? Tweaking their business models and making their stores locally relevant. Take a look at how global and local companies are adapting and innovating for the Indian consumer in the organized market.

1. Flexing Store Formats—With over 150 stores across India, Big Bazaar (an Indian hyper-market) is created on the principle of a “bazaar” (the Indian market place); Big Bazaar offers a local market feel but in large store format set-up. Wal-Mart (Easy Day in India) too is moving away from its typical big-box strategy and is diversifying its store format strategy in India e.g., opening small format stores, creating stores in the middle of towns and residential areas to make it easily accessible.
2. Meeting local expectations—Distinct regional preferences of the Indian consumers are mirrored in store efforts to localize merchandize across stores. This helps in making stores relatable, merchandize appealing and consumers comfortable while shopping. For example, Marks & Spencer’s has been working to shed its exclusive and over-priced image. Based on Indian preferences, Marks & Spencer’s for the first time introduced shirts with pockets and longer shirts for women. In addition, it has made itself less niche by making its products affordable and expanding in big and small towns through a varied store format.
3. Embracing Customer Service—Along with the traditional conveniences of local stores (e.g., home deliveries), courteous staff and loyalty programs are basic expectations. For most successful retailers, technology aided services (like e-commerce, online stores and store operating systems) differentiate them from the rest. For instance, Shopper’s Stop, a department store chain and multi-brand apparel retailer provides high quality customer and store experience by combining traditional services like in-house tailors with strong technology solutions in online, point-of-sale and inventory. This has helped it carve a reputation for itself as a convenient and reasonable store to shop from.

Do you have any experiences or stories on what companies are doing differently to be accepted in the Asian market? What do you think is working for them?

As we speak with marketers moving into emerging markets, many cite considerations such as how to organize staff to support these markets or how to manage the trade-offs of having staff in disparate locations. In simple economics terms: how should they manage the “supply- side” factors”?

While examining the supply-side is important, an equally productive, but often under-usedtactic, involves analyzing “demand-side” factors—namely, what will drive customers in an emerging market to buy your product(s). Regular readers of our blogs will know that our latest research reveals that the drivers of customers’ purchase decisions are changing significantly in both B2B and B2C sectors (for those unfamiliar with this work, our B2B analysis can be found here, and our B2C analysis here).

But, what do these findings mean for emerging markets?

I’ve just returned from my second trip this year to meet with marketing leaders in South Africa from roughly a dozen companies. There has been great debate on the similarities and differences between customer purchase decisions in developed versus emerging markets as well as on how brands should respond. Below are a few of the highlights from these discussions related to B2C markets (I will reserve B2B observations for a future post).

The Consumer Purchase Decision – Different or the Same?

Emerging Markets Are Different!: In developed markets the purchase decision is more schizophrenic due to factors such as recent declines in spending power that create greater willingness to try new brands, or new technologies that facilitate switching at the point-of-sale (e.g., mobile coupons). Meanwhile, in emerging markets the proliferation of brand choice is a more recent phenomenon and is altering the purchase calculus for consumers in these markets.

Emerging Markets Are the Same!: While the starting point might be different, the complexity of purchase decisions is increasing everywhere. Moreover, as in developed markets, emerging market consumers are increasingly armed with up-to-date information on everything from reviews of product features to the location of lower-cost substitutes.

Takeaway for Brands: The marketing tactics that worked five years ago are likely less powerful today. Winning global brands will be rewarded for revising their understanding of what drives brand commitment during purchase and re-calibrating their marketing efforts accordingly.

Responding to Purchase Complexity – Different or the Same?

Emerging Markets Are Different!: In developed markets, our research shows that brand affinity accounts for a third of brand commitment, while the in-the-moment purchase path accounts for the remaining two-thirds. This is due to a consumer population that is overloaded by decisions and prone to shifting brands at the point-of-sale.

Emerging Markets Are the Same!: The jury is still out on how overloaded consumers are in emerging markets. Anecdotal feedback from marketers suggests that brand choice does not appear to be overloading consumers to the point that consumers are in developed markets. At the same time, the purchase decision at the point-of-sale isn’t the foregone conclusion it often was in the past.

Takeaway for Brands: Brands would be wise to continue long-term investments in brand affinity efforts (principally through differentiated emotional connections), while keeping an eye out for signs that consumers are becoming overloaded and, therefore, require simplified purchase decisions.

Please let us know in the comments where you stand on the similarities and differences between marketing in developed versus emerging markets.

Over 100 years ago, the founder of Wagh Bakri wanted to create a tea that would unite all Indians.  ‘Wagh’ means ‘Tiger’, standing for Indian upper classes.  ‘Bakri’ means ‘Goat’, and represents the lower classes.  The idea is to bring the Tiger and Goat together over tea, an important and shared ritual.

The juxtaposition of the Tiger and the Goat is probably, metaphorically, what stood out most in my first visit to India a couple weeks ago.  Around every corner, you get images like the one that sticks in my mind of an extended family scraping together a meager existence beneath a brand new elevated rail line.  But in talking with Indians, it’s striking how optimistic all of them are for what the future holds.

The sense of optimism isn’t the only difference between your average Indian consumer and an average Western consumer.  MLC pulled together a group of 15 CMOs from native Indian enterprises, from Reliance to Tata to SBI Life to Gujarat Tea.  We discussed MLC’s latest B2C work focused on Decision Simplicity, with an eye to understanding similarities and differences between Indian and Western consumers.

Here are a few other Indian consumer insights I picked up:

• “The Hindu Middle”: Indian consumers typically don’t use extremes in calling out products or people—they avoid hyperbole to the up- or down-side.  As a marketer, if you were hoping for Indian consumers to provide product ratings and reviews with the same grade inflation you see in the West, be sure to have a Plan B.
• Recommendation cynicism—Indian consumers are by nature not trusting of third party recommendations.  Despite (or perhaps because of?) a marketing culture of rampant celebrity endorsement (Bollywood and cricket stars plugging products everywhere you turn), Indians tend not to put much weight on recommendations coming from third parties they don’t know.  Ond CMO suggested that, unless an Indian consumer has a basis for deep trust in some other facet of life, she is unlikely to trust the recommendation of another Indian…even an acquaintance.”
• The novelty of brand choice—the average Indian consumer is very much in a state of welcoming all the new choices that a teeming free-market has to offer.  There’s a degree of amusement and entertainment for the Indian consumer in experiencing the range of choices that Western consumers are familiar with (and often jaded by).

Have another Indian consumer insight to offer?  Drop us a comment below.  And then, stay tuned for more to come as MLC continues to explore global marketing and marketing in emerging markets.

ps  You can, of course, find Wagh Bakri on Facebook.

For most consumers, traffic’s an interminable, unavoidable, incidental cost of urban life. For the cities themselves, though, traffic is a perfect manifestation of the present. Outside Delhi, every morning jam is a horn-honking, engine-idling purgatory of acceptance and frustration. But it’s also a daily, ritual affirmation of aspiration. It’s an inherent part of a world that millions of consumers here in India’s biggest cities have chosen to participate in.

Late last year Iconoculture launched a new consumer advisory service — in and about India. It’s the culmination of years of groundwork we’ve labored very hard to lay, but it’s also a mere glimmer of what promises to be a fast-moving future.  With that work behind us, our next step will be to collect your feedback on what you need to know about this dynamic market and infinite variety of the consumer base in India.  MLC members, contact your account manager if you’re interested in joining the conversation.

In the meantime, here are some of our latest observations from a fascinating market:

Computing in Rural India. Dell, the consumer notebook leader in India, is planning on extending their retail operations into smaller cities throughout the country, similarly expanding research and customer service. The company expects to be the exclusive retailers of Dell products in the smaller cities, capturing a greater part of the retail computing market for themselves in the process.

Organic Farming in Karnakata. In another sign of increasing prosperity and a move away from subsistence livelihoods, thousands of farmers in the Indian state of Karnakata have pledged to follow the rules of organic farming at the behest of spiritual leader Sri Sri Ravi Shankar. Shankar’s Art of Living Foundation has visited thousands of villages in India, training farmers in organic methods.

Medical Tourism. The high cost of quality healthcare in many Western nations, as well as the unavailability of quality care in developing nations in Africa and Asia, is driving patients to seek treatment in India, where procedures can cost 80-90% less. Treatments and procedures at spots like Fortis Healthcare and Columbia Asia include joint replacement, spin surgery, bariatric surgery (weight loss surgery), cosmetic surgery, cardiac surgery and organ transplant surgery.

MLC members, for more on subcontinental trends, visit our Iconoculture insights center.

I had the chance to be at the Consumer Electronics Show this year for the first time in many years.  It was overwhelming:  too many things to look at, and unfortunately too many of the same things (something like 1000 tablets (exaggerated), connected TV’s, 3D everything, a streaming media cacophony).

I took a guided tour that’s offered annually by our sister program Iconoculture.  They put together this really great walk to take you to the exhibits that matter across the million-and-half square feet of show floor space in a two hour compressed bite.  It’s the ultimate CliffsNotes when a lot of the book isn’t any good.  The Icono team previews the technology during press day and then pulls out the interesting products and services that punctuate the consumer trends that they’ve been writing about.

This year’s consumer theme?  I’m probably going to butcher it up, but it’s about how, as the world becomes more and more connected (think smart toasters, or “the Internet of things“), a lot of what companies are trying to do is to create meaningful experiences for consumers at the right time, with the right information, on the right devices.  Media and consumer experiences are mind-blowingly complex, with more information and media streams than anyone can shake a stick at.  It’s no longer about collecting and making available as much information as you can, but it’s about curating that noise into creating the opportunity for consumers to discover what’s relevant for themselves and their friends/family.

Now this isn’t a tech blog, but there are two things that I saw at CES to help illustrate the idea.  Gracenote and the Nielsen Media-Sync platform creates two way engagement around the TV experience.  Using Nielsen Media-Sync platform on top of Gracenote’s meta data, mobile apps can “listen” for audio watermarks to sync interactive content with the show.  The consumer controls what they see by what they choose to watch; the complementary iPad experience lets the consumer dig further into the curated bits around the show that matters to them. The implications for advertising and tapping into super fans are amazing.  The second example, VideoSurf on Verizon 4G, uses the Android smartphone to “shoot” the TV picture and pull up relevant content that ties to that video bite.  (It uses facial recognition to find actors in the show and information about the current episode.) You didn’t think Gwyneth could actually sing?  Read about it as you watch that “Singing in the Rain” Glee episode.

The Iconoculture tour itself is a perfect metaphor for this consumer trend.  They mapped out the world of noise and enabled me to then find the things that were right for me in my context.  Without it I would have been left wandering the uncharted wilderness for hours, if not days, left wondering how it all fits together for me.

How is marketing going to find the right consumer context for self-discovery?  How does self-discovery influence and inform message receptivity and purchase behavior?  Marketing may just be better marketing when the idea or product is self-discovered, when it’s contextualized against the backdrop of what the person is trying to do.  Could the ultimate marketing competency be curation?  It’s odd that we talk more about product and brand marketing than lifestyle or curatory marketing. Without curation, we add noise, we add irrelevance. Consumers are actively looking for tools to manage and edit what marketers are pushing, many of the most interesting smartphone applications like RedLaser, ShopKick and Nielsen Media-Sync are on the front lines of this effort.

So why does the porn convention happen every year during CES?  Well apparently, up until 9 years ago, they were linked under the CES umbrella.  Then the adult industry grew big enough to want their own space, but every year they still do both exactly at the same time.  This year, they shared the hallways of the Venetian in Las Vegas.  Think about it as a curated experience within another experience and a chance for self-discovery.  Ah, it makes total sense now.

For those who were not able to attend, here are some of the key takeaways from the meeting:

Avoid generating lots of ideas and product launches: While many organizations try to create large numbers of ideas and lots of product launches, innovation leaders actually require half as many ideas for each successful new product launch. Also, leaders realize too much emphasis on launch volume leads to incremental innovation and lowers chances of big wins. Meeting attendees agreed that fewer ideas and fewer product launches are the better strategy.

Focus on producing bigger ideas that meet bigger customer needs: Winning companies generate bigger ideas by surfacing and solving higher-order emotional needs or business outcomes. They use the following techniques:

• Knowing what they’re looking for: Leading companies establish guardrails to define acceptable types of innovation to guide their employees. Even a simple vision statement can help explain what’s in and what’s out.

• Solving higher order needs: Leading companies use techniques like high-level need dissection, lead user analysis, and jobs-and-outcomes approaches to identify and address higher-order, emotional needs.

Protect innovations by systematically applying switching costs: The most admired innovations (think IPod, Netflix, Swiffer) sustain large profits because they protect themselves against copycats. While many companies believe they consider switching costs when designing new products, few do so systematically. As you consider switching costs, remember the following:

• Technology is making switching costs easier to create than ever before. Consider the ease of building virtual communities and capitalizing on network effects, personalizing offerings with customer data capture, and turning products into services through mobile tracking technology.

• The trick is to build creative “lobster traps” – creating barriers to customer switching (leaving) without erecting barriers to customer adoption (entry). Leaders apply the following approaches:

1. Use interconnectivity as a launching point. Here you want to exploit data and online networks to provide unique offerings. Examples include online communities that meet a customer need (Texas Instruments’ E2E community), information capture for personalization (Netflix recommendations), and product-service transformation that makes your product indispensible (GE aircraft engines).
2. Create switching costs that add value to the customer. The trick is to increase your ties to customers without frustrating them. Examples include designing unique replacement parts for products (Nespresso coffee pods) and making customer re-ordering easier (Amazon subscribe and save).

Use crowd-sourcing to build credibility and demonstrate quick wins: While internal crowd-sourcing is not effective at generating radical innovation, companies can use it to build acceptance of incremental change as a pathway towards more radical innovation. Meeting attendees expressed great interest in crowd-sourcing but few utilize it systematically. Many expressed concern that a lack of employee involvement would doom crowd-sourcing efforts. Research shows the keys to effective crowd-sourcing and employee engagement in the efforts include: 1) collaboration-focused technology, 2) incentives for collaboration, and 3) collaboration metrics and thresholds.

With all the great discussion at these meetings, we are certain innovation will continue to be a hot topic. MLC would like to thank all the companies who participated in our research and all who attended our innovation meetings.

MLC members, review the full meeting material here, and for help with VOC and ideation, check out some of our prior work.

It was a huge success, with great feedback from our members.  Attendees, you can continue the conversation and get soft copies of all materials by following this link.  Anyone see the conference in tweets by searching #cebsm.

We figured the best way to get across all the cool ideas coming from the conference was list form.  So here goes – the conference in lists.

First list is the biggest takeaways.  Brent Adamson did a great job describing these in his wrap-up speech:

1. You win (or lose) in the purchase experience.  In other words, How you sell matters more than what you sell
2. All communications must lead with insight, specifically they must lead to your unique strengths, challenge customers’ assumptions and catalyze action
3. Differentiators must tie to your unique strengths.  As Deb Oler from Grainger said, you need to know why your customers should by from you instead of the competition.
4. Touchpoints must reinforce unique benefits (benefits that are specific to an individual company’s customer experience).  This is what the highest preference brands do.
5. Commercial innovation needs deliberate focus, and relies on opening or lateral thinking.  Narrow thought processes shut down innovation
6. Reps must challenge customers.  Strong customer relationships do not ensure success, and challenging (including teaching) are the right way to build relationships

Next, the most popular tweets (based on retweets):

1. B2B social media is lead nurturing. Marketers should resource efforts in social media the way they do other lead gen activities.
2. 53% of b2b loyalty comes from the purchase experience, more than product, brand, service combined.
3. Tom Kelly: ‘I’m not sure who discovered water but I’m sure it wasn’t a fish.’ We get so immersed we don’t see our environment.
4. Interesting thought about innovations: they’re obvious in hindsight, hard to see with foresight.
5. Session on VOC program: 62% have a VOC program, only 30% systematically incorporate the feedback into the biz

Last is the to-do list for sales and marketing.  Brent wrapped up with an expectation that those in the audience would take action on everything they’d learned.  Here are the four things he told marketing to do:

1. Collaborate with Sales to identify unique benefits customers will value (this was the top of the list for Sales too, by the way)
2. Skew resources toward developing insights.  Ultimately, it’s Marketing’s job to help develop the insights that the commercial organization can rally around.
3. “Package” insights for easy consumption.  Depending on how much control you have over customer consumption of those insights, you’ll need to treat the insights differently.
4. Force focus on non-product/service innovation.  It’s not (just) what you sell, it’s how you sell.

Conference attendees, add your own list in the comments section (Biggest takeaways?  Favorite session?  Best drinks at LIQUID?).

Did you know that over half of a b2b customer’s loyalty is explained by a differentiated purchase experience?  That’s what we found when we did an in-depth quantitative look into the drivers of customer loyalty.  The impact of a differentiated purchase experience is more than the impact of differentiated products/services, company brand and perceived value-to-price ratio combined.  In other words, it’s not what you sell, it’s how you sell.  And it has huge implications we’ll be looking at in interactive sessions across the two and a half days.

I’ll be blogging and tweeting throughout the conference, as will Doug and Peter. Want to join in the online conversation?  Don’t be shy, comment below or come find me – we’d love to have some guest bloggers talk about their experience at the conference.

Here’s what I’m looking forward to most:

• Thomas Kelley from IDEO talking about commercial innovation and helping everyone in the firm build creative problem-solving skills.  Breakthrough innovation is on the agenda of almost every marketer we talk to these days and IDEO’s got quite a track record.

• Our very own Brent Adamson explaining the importance of insight with some great stories from his experience discussing this with hundreds of member organizations.  I’m especially intrigued to see what happens when both sales and marketing hear this message together and recognize both the opportunity it provides and the need to collaborate even more than before.

• Doug’s workshop helping attendees figure out the best social media approach for their teaching message.  Everyone will have a chance to think through their teaching messages on day one, then Doug will help folks deal with the second burning question of the moment: “As a b2b company, what do I do with social media??”

• Connecting people!  Every day we at the MLC have conversations with members about their challenges and how to solve them, as well as their successes.  Now it’s easier than ever to just grab two people I know are dealing with the same issues and help them talk it over.

If anyone would like to join us, it’s not too late – we’ll be at ARIA at CityCenter (avoiding the ‘death ray’ at neighboring hotel Vdara).

Those of you joining us – what sessions are you looking forward to most?

Jeff Lavers, 3M’s VP of Marketing, Sales and Communication, shared some lessons that all of us would probably be wise to consider as we pursue innovation within our own organizations:

Put Customer Problems Front and Center: 3M believes in studying customer needs very closely. It uses ethnography to understand not so much what customers say as what they do.  As one example, Jeff described how 3M’s “Huge Opportunity Teams” (HOT) spent six weeks observing cars in a body shop and realized painters were the highest paid technicians and spent 40% of their time cleaning paint guns. To eliminate the need to clean the paint guns, 3M came up with a unique disposable bottle. The result was a huge time and resource saving for owners of body shops and people wanting their cars re-painted.

Give Employees Time to Explore: One of 3M’s early leaders, William McKnight, encouraged his managers to allow employees to experiment and to define the best way to do a job. He institutionalized this philosophy by allowing employees to spend up to 15% of their work time pursuing projects about which they were personally passionate. Still alive today, this approach is considered fundamental to 3M’s innovative culture.

Encourage Employees to Make “Uncommon Connections”: 3M is blessed with six diverse business lines, ranging from consumer products to industrial technology. Realizing the tremendous power that springs from connecting diverse ideas, 3M encourages informal employee networking every day. “Tech Forums” are interest groups where engineers share their new technologies and connect with other employees who may be able to help move ideas along.  3M provides some structure through formal leadership and small budgets to encourage communication but relies on passionate employees to get involved. It’s clear all employees live the ideals of connectivity and collaboration; in fact, 3M likes to say everyone at the company is only two phone calls away from finding the expert on any topic.

Balance Technology Push with Customer Pull: 3M uses a simple equation to think about innovation:  1+1 = 3 or Right Technology + Right Customer Insight = Big Innovation Returns. If 3M is struggling to meet its ambitious innovation goals (believe it or not, it sometimes does), it’s likely one of these inputs is underperforming or out of balance. R&D may be inventing a lot of technologies that Marketing cannot sell. Likewise, Marketing may be over-testing prototypes with customers or making too many demands of R&D. Keeping these opposing forces in balance is key to making the machine run smoothly.

MLC members, for more information on innovation, please visit our NPD and Innovation topic center.

Whether co-opting outsiders into helping you innovate as NASA does or getting creative with your ethnographic research as Moen did, we are seeing more and more members reaching out to their customers – and even their non-customers – for innovation help.  Already NASA’s Centennial Challenge Program has resulted in technological breakthroughs orchestrated by a “regular guy” from Maine working alone in his dining room as well as a group led by an undergraduate student at Worcester Polytechnic Institute.

Of course, just opening your doors to the outside world isn’t going to be a panacea that cures your innovation ills.  While we are seeing lots of companies succeeding via social media platforms that engage customers in idea sourcing (see examples from Starbucks and Dell), the best marketers are leveraging their “specialist users” over their “mass customers” to drive real breakthrough thinking.  From automotive companies to commercial paint manufacturers, we’re hearing more and more about the pursuit of customers with a unique skill set or unique need state that open more doors to innovative thinking that traditional research approaches – even one company that has successfully recruited “haters” of their products.

MLC members, are you curious about how the best companies identify and co-opt their specialist-user customers to jump start real innovation? Join us for more on this topic by attending one of our half-day Innovation Summits.  The next session, on July 22, is being hosted by W.L. Gore, makers of GORE-TEX, and will include a tour of their world-class innovation center (40 minutes outside of Philadelphia).  Curious about how your innovation efforts stack up against your peers?  Take our innovation diagnostic and find out.

There’s also this large sporting event coming up (in case you haven’t heard): the 2010 FIFA World Cup. Or rather, “the-every-fourth-year-global-football-tournament-to-determine-a-single-country-champion,” as FIFA would like me to refer to it in this space.

FIFA is playing brand police here in South Africa, and a ruthless outfit at that. You can find just a taste of their efforts in this article. My personal favorite – their request of Kalula, one of South Africa’s low-cost airlines, to withdraw its slogan “Unofficial National Carrier of the You-Know-What.” While fully understanding that FIFA and its corporate partners paid truckloads of money for brand exclusivity at the tournament, the brand management tenacity at play here seems to far exceed rational boundaries.

When you’re shutting down a street vendor for selling a scarf with the words World Cup on it, it seems a bit beyond the pale – especially here in South Africa, where the World Cup may be the lifeline to a better livelihood for that precise street vendor.

FIFA is even removing any brand mark from legitimate products sold in stadiums that are not linked to its corporate sponsors. FIFA’s marketing director Thierry Weil said this: “The restriction is, it must be unbranded, but you will still make money, so this unbranded one is not harming anyone.” By his stated logic, this is facially absurd. FIFA clearly believes that brand is paramount to financial success (as do we here at MLC), hence the restrictions on those brands not associated with it. The brand removal must be at least somewhat harmful if protecting even the omnipresent name World Cup proves so important.

Perhaps I’m going overboard and am blinded by the incredible hospitality the South Africans have shown on my trip thus far. I’d love to hear what our members think on this topic. Certainly, my colleagues in our Communications Executive Council have produced much research on the importance of reputation management; I would never argue with the merits of brand standards and guidelines produced by marketing.

Yet something about this example strikes me as going one step too far, taking brand management far beyond its intended purpose. It isn’t as if the public doesn’t know the World Cup brands. Official credit card: Visa (thank you Morgan Freeman). Official soft drink: Coca Cola. Official restaurant: McDonald’s. And now we have an official brand police officer – FIFA. To invert McDonald’s line, I’m not lovin’ it. But wait, am I allowed to write that?

Discerning a common thread among those on the Fortune list isn’t easy, especially since most would rarely appear on an ‘innovative company’ list. You could certainly argue that value positioning helped tremendously, i.e., the right economic proposition to capitalize on retrenched consumer spending. Companies like Dollar General, Dollar Tree, and Ross Stores certainly fit the bill. Yet, there are plenty of ‘value’ retailers that noticeably didn’t make the cut, from Family Dollar to the granddaddy of them all, Walmart. There isn’t an easy industry lens to the list either – in what was generally another poor year for financial services, USAA, Wells Fargo, and Erie Insurance beat the odds handily. Even with oil prices up across 2009, there isn’t an energy company to be found.

There must be something all these companies are doing right. Judging from those on the list that are members of the Marketing Leadership Council, I can say with certainty that part of the secret sauce is marketing-led customer centricity. Marketing doesn’t play a bit part in corporate strategy; it leads it. The customer isn’t an afterthought in marketing planning; it is the plan’s foundation. Brand positioning doesn’t waver; it remains crystal clear, enabling the customer to know with precision the value they will receive. Customer loyalty isn’t another consulting catchphrase; it’s pursued with intensity.

So in dueling lists, we have shrinking companies that are considered innovative and rapidly growing companies that some consider formulaic. Maybe it’s just a matter of semantics. But to parrot the Council’s own jobs/outcomes phrasing, the fundamental questions are these: first, what is the core task that we as marketers seek to accomplish? And second, what outcomes will tell us whether we have achieved success?

To my mind, our core task is to satisfy unmet customer needs through the right product and service offering. We’ll know success when customers not just purchase, but repurchase and advocate for our brands – which our CFO happily measures as increased revenue and profit. Sign me up as an advocate of revenue growth over innovation, muddily defined, any day of the week.

By Rob Hamshar

One of the many hats I wore while posted in CEB’s Asia hub in New Delhi was that of “glocalizer”—contributing to the organization-wide effort to translate insights for the region.  It was exciting to see such efforts come to fruition. 

One of the more visible projects I was involved with is CEB’s joint initiative with the Indian business publication Mint Magazine (a partnership of HT Media—inaugurated by The Mahatma himself—and The Wall Street Journal).  With Mint, we publish a monthly series, entitled the Six Myths, based on the thought leadership from the global memberships at CEB and the regional expertise of the folks at Mint. 

Recently, our Six Myths installment focused on six common misconceptions about the world of Sales that are especially relevant to heads of Sales and Marketing in central and east Asia.  Though most of the myths align to the broader challenges faced anywhere in the world, some were especially resonant in India. 

The one the stands out the most is Myth #3—Sales Rep Time is Best Spent in the Field.  The idea that an “always be in the field” mentality is an indicator of poor performance was an edgy finding from our quantitative analysis of Sales Rep Effectiveness a couple of years back.  But it really takes on new meaning when you place it in the Indian context—where I’ve personally negotiated 3-hour traffic nightmares to attend important meetings across town (fyi: during monsoon season, multiply travel time by six).  When you’re trying to close deals in the urban centers of today’s growth engine economies, perhaps the time in field measure takes on greater significance, and requires a traffic-to-meeting ratio to understand true performance (or would that just promote more aggressive driving?).  More research to be done, I suppose.

As another example, we tackled the myths in driving customer loyalty.  We pulled heavily from the past 4 years of MLC research into the Loyalty topic.  As we got into it, we found the concept and connotations of loyalty can be markedly different in India and much of Asia when compared to North America, so finding the relevant parallels from our work was a bit tricky. 

In the Indian B2B sector, relationship-based selling is still a dominant practice , despite findings to the contrary in most western contexts .  And so personal loyalty and reciprocity is still the prevailing frame. 

In the Indian B2C sector, there’s still considerable disagreement around what works and doesn’t work in building loyalty, especially when so few customers have reached the minimum threshold of satisfaction with their brand experience.  Believe me—I can share more customer experience nightmares than you’d care to hear about from the mobile phone providers and food purveyors. 

However, despite these differences, there is still a huge opportunity for MLC to immediately help Marketers understand and manage loyalty in their regional contexts.  The success of the Six Myths is evidence of that. 

Four years ago, this Council member was spending 100% of its marketing resource in a traditional “fire and forget” manner—campaign-driven with traditional media featuring heavily. Today, that mix has shifted to three-quarters digital and emerging media.

The speed and magnitude of the shift is remarkable in its own right, but more interesting has been the shift in the operating mentality of the marketing team. Fully half of the marketing team’s resources, time and energy is managed in an “Always On” mode, not on a fire-and-forget basis. This Always On mentality, more than anything else, has poised the company to see great success with digital media and social networking in the coming years.

Why?

Because this company is far more likely to maintain the continuous investment that digital and social media demand. Marketing’s Always On mentality has embedded the kinds of behaviors and processes that are best suited for nurturing the relationship assets that these media can create.  What do those behaviors and processes look like?

• A budgeting process that treats maintenance of relationship assets for the long-term investment they are
• A steady work cadence that lets marketers put ongoing attention against optimizing and course-correcting relationship assets (as opposed to the big burst, up-and-down, campaign-centric approach)
• Planning processes that are flexible enough to integrate campaign-based marketing initiatives with evergreen assets (whether a website or a Facebook friend community)
• Governance mechanisms for assets that are shared across product groups or businesses
• Patience for an extended time horizon to see significant returns from those assets

In summary, benchmark yourself against an Always On modus operandi if its social and digital marketing success you seek. Oh, and pack a heavy coat if you’re visiting Scandinavia in March.

MLC members, dive into our newly launched Social Media resource center with expanded tools, vendor ratings exchange, and updated social media showcase.

For all readers, you’ll find a nice selection of heavy winter gear here, here and here (actually, this last one is for dogs. Its called Chilly Dogs. I can’t make this stuff up). If you’d like Swedish meatballs without the frigid temps, Ikea’s store locator is here.

Following my last post on globalization and its ramifications for the structure of global marketing functions, I spent a week trying to unplug in Italy (thank you, Starwood points). What spurred the above introduction was the amazing difference in marketing communications techniques required in the Italian market versus the United States – both industrialized Western countries with heavy penetration of traditional and digital media. Similar on paper, far different in practice.

Two examples to illustrate the point: the U.S. has more television channels than anyone can possibly absorb; Italy is lucky to top out at 20, with RAI and Mediaset accounting for most viewership. Micro-targeting by consumer preferences, geography, and niche TV channels, while so prevalent in the US, could hardly exist in any meaningful fashion for Italian campaigns.

Or take outdoor advertising – billboards, posters, street signs. You can’t turn a corner in Rome without seeing an ad plastered on exterior building walls; street names adorn the top of 2×3 foot signs displaying the latest Versace gown. Put those same posters in downtown Chicago or Washington D.C. and you’d be handed fines for littering or defacing private property. In both examples, touchpoints deemed critical for one media consumption culture have little to no value in another.

Are our marketing departments structured to take advantage of these diverse media environments? As consultant-speak as it sounds, glocalization must become a capability of global marketing functions if those organizations want to achieve some semblance of communications resonance in diverse markets. There are multitudes of trade-offs for marketing executives to consider here – which capabilities to keep tethered to a global center, how to overlay behavioral segmentation with media consumption, how local the ownership/creation of communications must become. All the while, executives must keep brand consistency and customer experience foremost in their minds. The power of today’s technology means that a misstep in Italy can mean headaches in the United States; local can become global instantaneously.

MLC members, browse our collection of marketing communications organizational profiles to see how your peers are tackling the organizational challenges behind communications resonance, and also see how Ford has overcome the challenge of selecting the right channels for each market through strong test-and-control experiments.

Whither globalization? I beg to differ.

There was a bit of consternation at the Davos confab earlier this year as to whether the era of globalization was the root cause of the global financial meltdown, and as a result, perhaps it was time to roll back some of that interconnectedness. Nicolas Sarkozy was particularly pungent in his argument to this effect. Granted, globalization certainly hastened the onset of recessionary tendencies the world over; international capital flows have only increased since the Asia financial crisis of the late 1990s sent a minor shock wave through the system.

Yet it stands to reason that with the right safeguards, globalization can again be a force for good.  In fact, many Western companies look to the BRIC nations (Brazil, Russia, India, and China) to provide the next wave of business growth. Success in those nations requires continued flows of money, goods, and labor around the world; protectionist measures would only make re-investment more difficult.

As a result, marketing executives must actively consider and act on the consequences of globalization, the recent economic meltdown, and the structural changes that may be required to optimize a global marketing function. To steal the cliché, what is the best mechanism to think globally and act locally?  Members are taking stabs at this from all angles – some pursuing greater centralization, others pursuing regional strategies. Then you have the Goldilocks approach (a compliment here) of HSBC – an amazingly consistent brand image worldwide, yet similarly strong local resonance.

To come out of the recession stronger than before, companies must rebalance their global portfolios to better adapt to emerging market opportunities and capitalize on untapped segments in the developed world. The way marketing structurally supports that global portfolio will have a large impact on company success. Substantive discussions should precede any structural changes to ensure the selected model best meets global business needs.

Personally, I think globalization will do a world of good for everyone, if pursued properly. It certainly makes sitting in an Amsterdam airport more interesting. And there’s my boarding call for BA 8456 to London City…

In the best of worlds, I see Marketing as the general management function of the company (don’t tell Sales). In it resides the most critical elements of commercial success: the customer and associated insight. Subsidiary to that, it contains market assessment, competitive position, brand development, marketing communications, etc. No one makes a customer-impacting decision without Marketing’s input and stamp of approval.  Again, best of worlds.

Yet oh how far most organizations are from that ideal. Marketing clamors to prove value with metrics and dashboards, struggling to remove itself from the dreaded SG&A CFO line item. The term “cross-functional” is more worn than an old suit. Not that Marketing can go it alone, but to live a day without subsisting on the beck and call of the next desired piece of sales collateral – that would be heaven.

Progressive marketing organizations are using the opportunity provided by the recession to rethink old-world organizational relationships. A direct question from a B2B software provider last week: “Who typically owns the customer experience?” Answer: typically no one function. So why not Marketing to drive the required coordination? Another question from department-store retail: “Social media impacts every function in our company – who should take the lead?” Why not Marketing as the subject-matter expert? More companies than ever are asking why their disjointed commercial operations are artificially delineated by Marketing and Sales. Why not an integrated function?

There is latitude for organizational realignment in 2010 as executives demand a return to growth, and a pressing need for marketing leadership within a forever-changed customer landscape. Without insight into rapidly changing customer needs, any effort by R&D or Sales will fall short. Without social media guidance, HR and Legal may shut down burgeoning efforts to produce low-cost, high-quality insight. There is opportunity for Marketing to assert its primacy in the portfolio of corporate functions and the case is clear. The only question remaining is whether the function can seize the chance.

• The recession has fundamentally recast customers’ hierarchy of needs, priorities and in some cases core values, giving rise to the “New Normal” customer
• The “Good Enough Revolution” (an important read) has demonstrated that, in many categories, the returns curve on adding new features has flattened or even inverted
• The increasing participation of our target audiences in digital and social media has presented an opportunity to dramatically reduce innovation cycle time
• The source of consumption growth is shifting to BRIC countries, which is putting more pressure on innovation processes to produce discontinuous innovation for those markets

In 2010, we will research these forces and more importantly, the best practice approaches that marketing leaders can use to retool their innovation engine for this new environment.  We anticipate delivering insights and best practices to the membership this summer.  Interested in shaping our research inquiry? Please email me (pspenner@executiveboard.com).

For those of you who need help now, here are MLC innovation resources that should help to see you through:

• Ground Yourself in Macroeconomic Forces: Join us for three upcoming webinars on the business barometers in the US, EU, and China with Dr. Roman Cech, PhD as our guide
• Understand How Your Customer Has Changed: start by attending the MLC’s upcoming webinar, Lessons to Remember: Recession-Era Insights Most Managers Will Forget, January 28^th, 11:00 EST
• Re-Examine Unmet Customer Needs: apply a customer jobs/outcomes approach to understand your New Normal Customer’s needs—see the Customer Outcomes Surfacing Process Tutorial
• Organize Innovation Around Key Segments: your customer segmentation may have changed—apply these World Class Segment Innovation Solutions to boost your innovation productivity

Or, if you’re starting from square one, visit MLC’s NPD and Innovation Topic Center.

I’m an airline junkie. George Clooney’s character in Up in the Air hit a little too close to home. But suppose you’re a leisure traveler now subjected (as of today) to a $25 one-way charge for your first checked bag, and a $35 one-way charge for your second. You may call this a fee, but the airlines call this ‘ancillary revenue.’

From the airline’s perspective, the logic here is simple – collect additional revenue from an activity the customer already does. Yet people respond to incentives, and the incentive here is clearly don’t check a bag. How about those unintended consequences? Passengers don’t check bags; suitcases get larger; security lines back up, overhead bins fill up faster; gate-checked luggage increases (where there is no penalty for checking those bags); on-time departure decreases; upset business traveler who followed the rules misses his meeting.  The customer behavior change is easily predictable in this instance because the penalty is large enough, yet the unintended consequences and negative externalities abound.

But ultimately, here’s the question – does it work?  Not even close. Check out Joe Brancatelli’s analysis here. Ancillary revenues are great, but how about top-line revenues, the ones that count? The only major airlines to avoid double-digit revenue declines in 2009 are the two that do not charge for the first checked bag (Southwest and JetBlue). Account for the fact that a greater percentage of the top line is coming from non-ticket sources, and you see that the bottom has dropped out for most of the major hub-and-spoke carriers. People respond to incentives whether we like it or not.

After a year of upheaval in 2009 where many struggled to stay afloat, marketers must remember the simple truths of consumer economic behavior:

• Do our businesses account for different scenarios if A occurs rather than B?
• Do we understand both the rational and emotional incentives to which consumers respond?
• How has social media changed the incentive structure for our consumers?

Members, join us for a webinar on January 28th on recession-era insights you can’t afford to forget.

By Laura Morris

It’s that time of year again – predictions and “what’s in/what’s out” lists.  Thought I’d jump onto the bandwagon by sharing some of the themes we’re hearing from leading B2C marketers as we ask them “what’s next?” for marketing.  Here are a few of the more provocative ways F1000 executives think your job is likely to change in the decade ahead.

What do you think?  Any other shifts you’d add to the list? 

If you’re a predictions junky (like me), check out Jay Baer’s “Colossal List of Social Media Predictions” for 285+ more items of fun.   

MLC members, stay ahead of the curve:  Join us for an upcoming “Profiles in Social Media Success” event to learn more about how social’s going to shake things up in 2010.  We’ll be in London on February 9th and in Chicago on February 23rd  to share our latest findings — I’d love to see you there!

Also, I’m heading up to New York next week for BDI’s “Social Integration” conference on January 13th.  They’ve got a great group of marketers lined up from companies like Pepsi, HP, and Intuit to share their social media “lessons learned” — and MLC will be there to facilitate a roundtable discussion on scaling social media across the enterprise.  If you’re in the area, join us!