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Getting Advertising Strategy Getting Advertising Strategy on the Right Track on the Right Track

A Case Study in Counterproductive A Case Study in Counterproductive Targeting and How to Fix ItTargeting and How to Fix It

June 4, 2009

Prepared for:

The Case of The Multi Symptom Remedy The Case of The Multi Symptom Remedy

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From category leader to struggling also-ran and (hopefully) back in five years

BackgroundBackground——Back In The DayBack In The Day

Our client’s brand was first introduced in the early 70’s, and for more than 30 years enjoyed a highly profitable leadership position in terms of market share.

The category remained in a state of relative equilibrium until 2006 when FDA regulations required OTC brands with Ephedrine & Pseudoephedrine to move behind the counter.

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• In a destabilized category, a new entry emerged which quickly took a 5% share of the business.

• This new entry focused on a single symptom rather than a range of symptomology.

• Much of the newcomer’s success came at the expense of our client brand which lost 3 share points in less than a year.

• Within two years, our brand seemed to be collapsing both in terms of brand equity and revenues.

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BackgroundBackground——A Leadership StruggleA Leadership Struggle

Find new media targets which index high on brand usage.Reinforce the brand’s positioning as a multi-symptom treatment option.

Leading Brand

Leading Brand’s Managers

35Brand Management did a little self-diagnosis and came up with a treatment plan….one grounded in intuition.

Management by IntuitionManagement by Intuition

The brand’s marketing execs seemed to be following Malcolm Gladwell’s advice in his run-away best-seller….

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The Father of Gut-Based Decision Making

Malcolm Gladwell

Management by IntuitionManagement by Intuition

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On Blink….

“With the right people in place, companies can liberate themselves from their obsession with data-driven decisions.”

Performance ResultsPerformance Results——Two Years LaterTwo Years Later

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• With an intuition-based strategy, the brand continued to slide and lost its leadership position in the category.

• The insurgent was now #1.

• An autopsy of marketing performance was undertaken.

• The autopsy raised serious questions about the targeting and positioning strategy.

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“The most important strategic decisions are targeting and positioning. Once you nail these, everything else follows.”

Phil Kotler

If Kotler is right, and targeting and positioning are the most important marketing decisions, then most marketers are off to a bad start.

Targeting and positioning audits reveal that most companies achieve an overall best practices score of about 60 on a 0-100 scale.

Our client’s brand fared no better. Its intuition-based approaches to targeting and positioning earned failing grades.

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Need State SegmentationNeed State Segmentation

Some Pros:Easy to doIntellectually interestingPeople love to name groups

Some Cons:Rarely identifies segments with different levels of potential value to your brandNeeds are often weakly related to behaviorCan’t be found in databases

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Lifestyle SegmentationLifestyle Segmentation

Some Pros:Interesting and fun to work withEasy for everyone to understandInsights for advertising copy

Some Cons:Lifestyles rarely predict brand choice or potential profitability for your brandCan’t be found in databasesLittle understanding of the differential problems of alternative targets

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Behavioral SegmentationBehavioral Segmentation

Some Pros: Very easy to do Easy for everyone to understand Managers love the 20/80 rule

Some Cons: Heavy users are price conscious Segments have similar preferences, demos, and media exposure patterns

Little understanding of the differential problems of targets

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Demographic SegmentationDemographic Segmentation

Some Pros: Can be found in other databases Differentially reachable with media Easy for everyone to understand

Some Cons: Demos rarely predict buyer behavior Segments have similar brand preferences and behavior patterns

Little understanding of the differential problems of targets

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Media Database SegmentationMedia Database Segmentation

Some Pros:Differentially reachable with mediaEasy for everyone to understandPlanners can find efficient targets

Some Cons:All your competitors have the same informationAll category sufferers are not equally valuable to youLittle understanding of the differential problems of targets

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Look, Ma…Strange Targeting, No Positioning!

The best thing marketers can do for themselves and their brands is to put effort into capturing clever, comprehensive measures of current and future profitability.

Use them to assess the potential value of individual customers and prospects and, therefore, every segment.

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• Usage, spending and growth potential• Decision-making power• Personal influence• Interest in treating symptoms• Openness to your brand• Channel behavior and channel margins• Problems you can solve• Retention potential• Price insensitivity• Interest in new products and services• Demographic growth vs. shrinkage over time• Lifetime value• Findability

Measures of IndividualMeasures of Individual--Level ProfitabilityLevel Profitability

Target Group Profile for Client Brand vs. Insurgent

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Category Usage 94 105Market Potential 101 110Price Insensitivity 103 104Personal Influence 95 112Responsiveness 92 109Chanel Margins 103 105Media Efficiency 138 103Lifetime Value 99 115

Overall ROI 98 133

ClientIndex

InsurgentIndex

0%

5%

10%

15%

20%

25%

0% 10% 20% 30% 40% 50%

21Advertising Awareness

Penetration(% Used Past 12 Months)

• Our Guy

• Brand G

• Insurgent

• Brand C

• Brand F

• Brand A

• Brand D

• Brand E

• Brand B

Positioning was equally problematic. The brand suffered from a below average ad awareness-to-penetration ratio.

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So how did our client find a targeting and positioning strategy that

will drive brand growth?

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Create Hundreds of

Ways to Segment the Market

•Attitudes•Treatment Motivations

•Category Involvement

•Likelihood to Treat•Shopping Habits•Treatment Behaviors

•Demographics•Psychographics•Media Behavior•Census Data

Testthe

variables to see which ones are

predictive of rigorous,

profit-related

criteria to identify key

market drivers

Put into a taxonomic analysis

(e.g. neural network,

latent class,

proprietary cluster)

Evaluate different solutions

using statistical,

managerial, AND

financial criteria

Identify a financially

optimal segmenta-tion and target(s)

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A target accounting for 15% of users in the category and 37% of potential profitability in the category.

Young Professionals are men and women ages 24-49 who work in professional occupations and live in upscale urban areas.

Stressed at work. Can’t afford to be sick—it’ll hurt their career. Are looking for a remedy which provides fast relief for ALL their symptoms. Importantly, they like the notion of a nurturing medication which conjures up memories of how they were treated by their moms.

The FinanciallyThe Financially--Optimal Target: Young ProfessionalOptimal Target: Young Professional

Target Group Profile for Client Brand vs. Insurgent

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Category Usage 94 105 126131Market Potential 101 110

Price Insensitivity 103 104 105Personal Influence 95 112 114Responsiveness 92 109 129Chanel Margins 103 105 107Media Efficiency 138 103 132Lifetime Value 99 115 128

Overall ROI 98 156 247

ClientIndex

InsurgentIndex

New Target Post Debacle

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“It’s how you differentiate your product or service in the mind of the prospect.”

Jack TroutThe Father of Positioning

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In a 2006 Copernicus Study, on average,only 8% of consumers could say anything about the two leading brands in the fifty largest product categories that we could begin to call positioning.

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One, two, or three words, phrases or sentences about your brand that you want to imprint in the heads of key stakeholders.

It’s the reason you’re giving consumers to buy your brand.

It’s your brand’s raison d’être.

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The ultimate driving machine

Real Italian flavor

Fast pain relief

Have it your way

Authentic, real, original

Imagination at work

1000 songs, impossibly small

Cheap flights with style

Fast, friendly service

The nighttime, sniffling sneezing, coughing, aching, stuffy-head fever so you can rest medicine

You’re taken care of

BMW

Barilla Pasta

Bayer Aspirin

Burger King

Coke

GE

iPod Nano

jetBlue

Mobil Service Stations

Nyquil

Vick’s

Past and Present Examples of Great PositioningPast and Present Examples of Great Positioning

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• Attributes (e.g., liquid vs. pill, contains ingredient X)• Benefits (e.g., clears up your skin, stops joint damage )• Target market characteristics (e.g., would-be athletes, working moms)• Occasions or situations where product is valuable ( e.g., high stress

situations such as weddings, business meetings)• Celebrity Endorsements (e.g., Tom Brady, George Clooney)• Sports teams connections (e.g., Red Sox, New York Knicks)• Affinity groups (e.g., USMC, University of Wisconsin)• Qualifications (e.g., most rigorously tested, associated with Mass

General Medical Center)• Social responsibility (e.g., 20% of all profits go to Susan G. Komen for

the Cure)• Intangibles (e.g., makes you glad to be alive, makes you more patient

with your kids)

Possible Positioning OpportunitiesPossible Positioning Opportunities

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No ActionNo ActionNo ActionCut Costs?

Potential Opportunity —

Increase Importance?

Low

Secondary Weakness

Secondary Opportunity

Secondary Opportunity

Secondary Price of Entry

Secondary Opportunity

Mod

Serious Weakness—

Try to Fix

Major Opportunity

Possible Opportunity

Price of Entry —Maintain

Key Positioning Opportunity

High

Motivating Power of Attribute/ Benefit

Client BrandInferiorUnacceptable

Acceptable, But Could Be

Better

Excellent: Could not Be

Better

Both the Same

Perceptions of (client) versus Clinique

No ActionNo ActionNo ActionCut Costs?

Potential Opportunity —

Increase Importance?

Low

Secondary Weakness

Secondary Opportunity

Secondary Opportunity

Secondary Price of Entry

Secondary Opportunity

Mod

Serious Weakness—

Try to Fix

Major Opportunity

Possible Opportunity

Price of Entry —Maintain

Key Positioning Opportunity

High

Motivating Power of Attribute/ Benefit

Unacceptable

Acceptable, But Could Be

Better

Excellent: Could not Be

BetterClient Brand

Superior

Both the Same

Perceptions of Client Brand vs. InsurgentBrandStrategyMatrix™

Value of Strategy Ranked from highest to lowest

Look, Ma! Now We Have a Positioning!Look, Ma! Now We Have a Positioning!

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Old Positioning Strategy Reinforce brand as a multi-symptom treatment option.

New Positioning Strategy Add speed to efficacy, connect with nurturing.

“Don’t miss a day of work! Provides fast relief of all your symptoms, just like mom used to do.”

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Management Always Comes Back With Two Ideas

Management Always Comes Back With Two Ideas

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Marketing Decision Typical Scenario

Targeting 1 – 2 Targets

Positioning 0 – 3 Alternatives

Advertising 1 – 2 Executions

Pricing 2 – 3 Levels

Sales Pressure Normal vs. High Pressure

Marketing Plan 1 – 3 Possibilities

Management Always Comes Back With Two IdeasManagement Always Comes Back With Two Ideas

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In the real world there are hundreds, even thousands of alternatives for each of these decisions which can be evaluated using criteria related to profitability.

If the probability of a transformational decision is about 2%, how likely are we to make that transformational decision when we consider only a few alternatives?

It’s close to zero.

Management Always Comes Back With Two IdeasManagement Always Comes Back With Two Ideas

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Some Closing ThoughtsSome Closing Thoughts

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In marketing, there is a world of difference between what’s considered a “good” marketing program—one that returns 1% – 4% on investment—and a great one—one that returns 20% or more.

The latter is called transformational.

“A transformational strategy is one so strong, so powerful, that it changes brand trajectories, career paths, sometimes entire companies and even industries….”

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Steps required for transformation:

• Highly profitable targets

• A compelling positioning addressed to the real problems of the most profitable target

• Evaluate many alternatives before selecting the winning strategy

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“A transformational strategy is not a matter of chance, it is a matter of choice; it is not a thing tobe waited for, but a thing to be achieved.”

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“Our job is not to defend yesterday but to invent tomorrow.”

Peter DruckerManagement Guru

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Thank you!

CopernicusMarketing Consulting

and Research

Waltham, MA / (781) 392.2500Norwalk, CT / (203) 831.2370

Kevin Clancy, ChairmanPeter Krieg, President & CEO

copernicusmarketing.com