Rex Briggs, CEO of Marketing Evolution and author of SIRFs-UP: Catching the Next Wave of Marketing interviews Adrian Wooldridge, Schumpeter columnist and management editor of The Economist in the UK
Rex: I’ve gone through some of the recent articles that you’ve written, and one that caught my eye was where you were telling businesses to focus on building a great business, not on fancy marketing. What do you see as the role of marketing?
Adrian: To tell the truth, I think that the extent to which you can create an image which is at variance with what you’re really doing as a company is less and less the case now. Companies are just much more transparent than they’ve ever been before. I don’t think that marketing can really create an image which is at variance with the reality and have it survive for very long. Hype will be punctured very, very quickly. I think the role of marketing is to amplify messages which are coming from ordinary customers. The most important marketers now are [a company’s] customers, because they have access to so much more attention-grabbing media than they used to have. Focusing on creating a good image is perhaps not the best use of your time. The most important thing to focus on is being a good company and doing your job well; your reputation will follow as a result.
Rex: I love the point that you mentioned about amplifying the message from real customers. What do you see as the role of market research in listening and figuring out who the real customers are, and shifting through the distinction between some customers loving you, some customers not loving you, or some potential customers not loving you? How do you think companies should be thinking about marketing research?
Adrian: I think marketing research is absolutely fundamental. Companies need to know as much as they possibly can about what their customers, and what their potential customers, think. It’s a very dynamic world, much more than it used to be. We’re no longer in the world of fixed customers and fixed companies producing the same thing for many years. The more dynamic the world becomes, the more important it is that you need to (a) ask about your customers, but (b) think about potential customers, because the nature of markets must change.
You also have to remember that successful companies sometimes have to sack their customers. It’s not enough just to provide wonderful services for your existing customers, because that might mean that you’re trapped in a declining market. Sometimes it’s not necessarily a bad thing to say “this collection of customers is not the customer I want, I need to change my profile.” And if you’re going to change your profile, you need to do a lot of research on potential markets.
Rex: How do you see businesses that have traditionally been focused on Europe and North America dealing with Asia, China and Brazil? In these emerging markets there are different customers’ needs, and a lot of new issues for businesses to try to get their heads around. Going back to firing customers, what do you think are the most important things to do? How do businesses evolve what they deliver so that reputation follows? What conflicts and challenges do you see in figuring that out?
Adrian: There are two really important things going on in emerging markets – and it’s difficult to talk about emerging markets because we’re talking about very, very large and very different countries – but two things I’d just pick out, while also conceding all the differences. The first one is the bottom of the pyramid, which requires frugal innovation, frugal products – products that deliver a lot of value for money at much less cost than they’ve traditionally been made for. Creating very high volume markets through much cheaper products in those markets is key. Whether it’s cheaper iPads, or cheaper mobile phones, or cheaper electrocardiogram machines, or much more basic products, selling in large volumes for a lower price is a very valuable business strategy, because these bottom-of-the-pyramid markets are going to be growing very rapidly. These people are going to be getting richer, they’re establishing their spending and their buying habits now.
The second important thing is the rapidly growing middle class in these markets. A huge amount of market research needs to be done on what these middle classes want. They’re very value conscious, but they’re also very variegated – you have a big Chinese middle class, a big Brazilian, a big Indian middle class. If you’re thinking about market research and the value of it, I think establishing what’s going on in those markets and producing things for the new middle classes should be a focus.
Rex: How do you reconcile this idea of marketing’s role being to tell the truth, and trying not to manage a reputation and image as much as trying to amplify the customers voice, with this need to establish an image looked for in aspirational markets?
Adrian: I think that these markets, emerging-world markets, are extremely brand conscious. For example, Singapore’s absolutely obsessed with brand-name universities in the West, particularly Harvard – it’s all to do with a guarantee of quality.
A lot of emerging-world countries have a lot of fake goods, fake products or very shoddy products. People really fetishise brands because those brands deliver on their promise of high quality. This reinforces my point about reputation. It’s fine to shout about reputation, but if it’s just reputation that is in any way divorced from quality, then you’re doing a lot of harm. The reason these markets are keen on brands is precisely because they’re worried about counterfeit goods or shoddy goods. They want a guarantee of quality. They deliver what they’ve promised.
Rex: I think brand fetish is a good phrase. Psychologically, we believe we’re pretty immune to brands, especially if we are more educated. For the most part, we buy a lot of things without much regard to brand. It simplifies our buying decision: they’ve been dependable in the past, we expect them to work in the future. But there’s always a view where we irrationally purchase and pay more for things because . . .
Adrian: Yeah, I’m trying to think of things that I irrationally do. I’m sure there are. I’m most likely to do it in areas where I don’t feel confident in my own judgment. When I used the term brand fetishism, I was thinking very much of Singapore, where there seems to be a real obsession with Western brands. Everywhere you go, every shop you go into, there’s a Western brand, and after a while it becomes a bit debilitating: you go to this very exotic, far-away place, and all you see is this succession of western brands. I think emerging markets need to be more self confident and more willing to create brands of their own. Tata, in India, is beginning to do that, a few Chinese companies are beginning to do that, but the business strategy of a lot of emerging-markets countries is still to buy brands, or value Western brands, not to create their own brands. I think the next great stage of their development is to create their own global brands.
Rex: Just changing topics a little bit – you wrote about a chief legal officer in the April 7th issue, and I got the sense from that article that you’ve had your ear inside the corporate boardroom, or at least near enough to senior executives to talk about what’s going on behind those doors?
Adrian: I’ll tell you what’s happening in the corporate boardroom – the life expectancy of CEOs has gone down dramatically. At the beginning of this century, it was probably about ten years; it’s now about six years – in some ways they are the world’s top-paid temporary workers. I think the capacity for action, for freedom of action, has also gone down dramatically. They have boards which are much more hostile or much more critical about what they do, boards that are much less partners and much more a sort of invigilators. Boards are not saying, “What can we do to help you fulfill your strategy?” or “What is your strategy?” They’re saying, “Are you doing this right? Are you paying people in the right way? Is your auditing process alright?” They’re very process obsessed, and I think that’s very difficult for CEOs who are constantly having to answer to analysts for quarterly earnings. These people are very well paid, but the life of a CEO is much less pleasant than it used to be. In a much more hostile environment, they find it hard to concentrate on long-term strategy formation. I don’t want to cry too many tears for CEOs, but the fact that it’s so hard to focus on long-term strategic thinking is a real problem for the boardroom at the moment.
Rex: I often think of marketing’s role as hearing the customer, understanding some of the trends, deciding which customers to keep and, as you said, which ones to sack. That is long-term thinking. Tell me a little bit about how you see the role of marketing in the boardroom, and what it ought to be doing for the CEO and for the board.
Adrian: I think marketing ought to be telling the CEO, and telling the board, what the long-term trends in demand are for their business, and veer the focus to the long term. These trends are very dynamic, they’re changing very rapidly in a very changeable marketing situation. Marketers should say: “This is what we need to do if we’re going to attract tomorrow’s fifteen to twenty-five year olds,” for example. A lot of big thinking is necessary. You have rapidly changing markets in America or Europe, that is to say, the developed world, but you also have huge emerging markets which are, in some ways, extremely opaque, extremely difficult to understand.
Rex: So with opaque, hard-to-understand markets, and the inherent conflict between short- and long-term thinking while facing a rapidly changing market, how should market research be looking at the data so that you have a long-term view that actually turns out to be real? My sense is, if you’re describing something that’s highly dynamic and changing in the short term, it undermines the confidence that you can predict very long term.
Adrian: Well, there are two things you need to be doing. One is, you need to have a lot of people around the world who are immersed in local markets and can constantly give you information about what’s going on in Brazil, China, even Florida. This gives a global view, up close, at these dynamic markets.
Second, you need to have people who are capable of looking at long-term trends. The simplest is demographics, but also other trends. For example, the growing scarcity of natural resources has huge implications: what should we be doing to squeeze more productivity, more value, out of the raw materials that we have?
I would advocate a two-streamed approach: on the one hand, lots of ears close to the ground all around the world; on the other hand, a number of people who are looking at the long-term trends, and looking at the ways that they will shape consumer demand in the future.
Rex: So to tie this back to what you were just saying about the long-term/short-term view, with the two pronged approach, how do you marry this thinking with your ideas around focusing on a core business and using simplicity versus complicated innovation?
Adrian: I’m a huge fan of simplicity, partly because I find all the technological products I have around me just incredibly baffling and complicated, and that complication creates a lot of anxiety in my mind. Products tend to be designed by engineers; engineers love all sorts of features, they cram as many features into them as possible, and that makes life very difficult for the consumer. Companies in themselves have become more complicated, because they have lots and lots of interest groups, bureaucratic groups, etc., and it’s easier to create new departments, new levels of management.
I think that in the future you’ll have consumers who want simplicity – as somebody said, people don’t want to buy a drill, they want to buy the hole; people don’t want to buy very complicated products, they want to buy solutions to their problems. I think that, particularly in Europe, where you’ve got an ageing population, you’re going to have many more ageing consumers who are just confused by all these choices. It’s easy for technologists to provide complicated products, more difficult to provide simple ones.
I think that the biggest growth in the world market is going to come from the bottom of the pyramid, it’s going to be poorer people who want value, but who don’t want to have additional, unnecessary stuff. Squeezing complexity out is good for consumers – consumers like things to be simple – and squeezing unnecessary costs out is also good for expanding your profitability. If I were to think of any business principle at the moment, I would say that simplicity is one of the most important ones: make your organisation simpler, make your products simpler, get rid of all sorts of unnecessary bells and whistles, all sorts of unnecessary costs. A frugal, simple future is something that I think we’re going to be heading for.
Rex: We’re at the end of our time together, so lastly, what advice would you have for the CEOs of marketing-research companies and the executives leading market-research companies or departments within big Fortune 500 companies?
Adrian: There are two big things. The emerging world is growing very rapidly, these markets are very singular, very dynamic, very different, and you just need to cast a very wide net to know what’s going on there. On the other hand, don’t get completely obsessed by all the details, because some big, dramatic changes are going on in the world economy. One is more value for money, more frugality, more ease of use. We’re going to have a resource-constrained future, so we can’t have so much waste. We’re going to have an ageing population, so people need their interfaces with their machines and technology to be as simple as possible – frugality, simplicity and delivering on your promises are going to be what I would be looking for from companies in the future.
Rex: Great, Adrian, I appreciate your time and thoughts.
Rex Briggs is CEO of Marketing Evolution and author of SIRFs-UP: Catching the Next Wave of Marketing and Adrian Wooldridge is Schumpeter columnist and Management Editor of The Economist in the UK