Too good not to share

Nothing new, but a great summary of BtoC marketing by The Economist:

Schumpeter on marketing

BtoB industry can be glamour, despite the lack of “brand recognition”

Brands are often considered paramount in today's marketing, to the point that monetary values are often assigned to them. This is obviously exceedingly difficult, not only because the concept of brand and what it entails is very vague, but also because of the subjectivity and changing tastes and constraints. For example, being environmentally and socially conscious is pretty much a requisite for a modern brand. It also raises questions such as "is it better for a brand to be well-known, or to have a high percentage of positive opinions?" Furthermore, the brand is closely related to the product, but public perception for a brand can sometimes be quite different from the product itself.

An opinion pollster, Interbrand, publishes each year a survey of "the 100 best global brands" (see here: http://interbrand.com/en/best-global-brands/best-global-brands-2008/best-global-brands-2010.aspx), and has an solid methodology, but interestingly, most people I showed it to had widely divergent views. Obviously, the survey represents an aggregate of opinions leaning towards a mean, but it's interesting to see how individuals have a very strong sense of the hierarchy each of them attributes to brand, to a level that can be considered equal, if not superior, to political opinions. For that matter, I have already argued that politics now includes many elements of branding, sales, and marketing, for good or ill.

This is what makes it so fiendishly difficult for a company to maintain a good brand image, especially at a time when technology allows information and criticism to flow so much faster and at little cost. Although the power of the internet should not be overestimated, as advertising and marketing use many different media, it does allow entities with small budgets, such as NGOs or individuals, to strongly criticize brand and bring their message to mass media. An example of that is the Greenpeace spoof on Volkswagen Star Wars' ad. It is also tempting to use a brand power to expand it, bur at the risk of diminishing the brand's image. Apple has successfully taken this risk by going into mobile phones and music sales, as seen in previous blog entries, without alienating customers.

That said, the main point of today's blog entry is how little recognition industrial brands have, in particular BtoB. It makes sense for reasons seen below, but is still worth discussing, as it strongly alters marketing techniques.

When teaching marketing, I did ask students to pick and follow a brand, building it themselves as a marketing exercise, explicitly stating that they could take either BtoB or BtoC. I argued that BtoB is comparatively easier to start with as it involves fewer variables: no focus groups, more long-term customer contact, more faithful customers due to long-term relationships, little or no advertisement. And yet, all the students picked consumer brands, preferably luxury and high-tech brands. Similarly, the only industrial companies whose brands truly register with people are BtoC, consumer-oriented brands. That reflects not only the higher visibility of those brands, but also the fact that most people notice mostly what they pay for as direct customers. For example, Getrag or Bosch are huge industrial car part suppliers, yet less known than even small automakers such as Fiat. Veolia has some brand value, mostly because it puts its name on buses and containers, but since it does business mostly with public collectivities, people do not see themselves as consumers, even though they indirectly are through their taxes.

While we could argue that BtoB brands do not need the same level of name recognition than BtoC brands, since their customer relationships are different, it still matters. Recruitment is one example, since graduates and job seekers may prefer well-known companies. Generating public sympathy is also a plus, as it can influence public policies, such as supporting a certain type of industry. Obviously, that point also depends on many other factors.

That said, should BtoB companies invest more in public relations in order to enhance their brand image? Considered the cost and the incertitude of returns on investment, investing in R&D, training, recruitment, and other such elements is most likely a better option, one chosen by most companies.

At the same time, I am impressed to see the efforts of industrial companies to adapt a business that is not very glamour, overcoming and evolving to changing regulations and long-term trends. Consumer fads do not matter as much as underlying changes, such as the necessity to hedge for national sales evolutions, environmental and industrial regulations (themselves led by end consumers and politicians), and fickle public officials. And those changes have an influence on our daily lives that is just as great as consumer technology improvements such as WiFi, GPS, or ESP.

For example, I have recently researched several companies. One recycles food processing industry leftovers, and turns them into fully usable products for sectors as diverse as bio-fuels, lipochemistry, and animal nutrition. Another is a traditional company that creates insulation materials, evolving to reduce its environmental impact, using more natural materials, and building “green roof structures”. A third builds heating systems and a fourth, electrical systems.

All have poured money, time, and the motivation of their staff into many improvements. They not only make the company more competitive, reducing costs and improving margins, complying with new regulations, but also fulfill an important environmental role. This is achieved through improvements in products, production methods, in the building themselves. External factors are also looked at, often with the partners involved: fewer deliveries cut fuel consumption and expenses at little extra inventory cost, while packaging is minimized and production leftovers recycled and re-used. Those incremental improvements, aggregated, have arguably more impact than large-scale projects in transportation systems and infrastructure, and yet generates far less publicity and debate.

Large multinational companies have had to adapt for a long time, but the recent wave of globalization has meant that even small companies now function internationally, either exporting their production, importing parts, or opening plants abroad. They do not have the legal resources of larger companies, yet adapt remarkably well, hiring more international staff and local agents in order to penetrate foreign markets. This has become essential for companies to survive and grow, as it opens not only new markets, but also hedges risks, regardless of the size of the manufacturer.

Environmentally conscious, important R&D budgets, open to international markets, flexible? I call that glamour.

Future entries may develop some of the themes introduced here, such as

• the influence of state and public policies on regulations and markets. They also include the impact of institutions and custom systems such as the EU, Mercosur, NAFTA, and so on.
• How public mood and opinion affects those policies on national and international levels
• consequences of the increased globalization on sales, recruitment and production

Comments and suggestions welcome

"Partage de la culture" ou vol?

J'ai récemment vu sur Facebook une pétiion pour "la liberté du partage de la culture", c'est à dire contre la loi Hadopi.

C'est une belle formulation, certainement, et en tout cas un bel acte de "marketing" de ce qui est légalement un vol de propriété intellectuelle.
Ceci dit, il est intéressant de constater que nombre d'entre nous ne considèrent pas la propriété intellectuelle comme une propriété privée, au contraire d'objets physiques. Les sentiments varient énormément en fonction des pays et de leur culture, ainsi bien sûr que du PIB par habitant en PPP. Un pays pauvre constatera très logiquement plus de piratages.

La France et les USA sont des cas intéressants, car dans la moyenne. Des abonnements peu chers et un accès facile à la musique et vidéo augmentent le taux de piratage, tandis que des systèmes légaux bien établis viennent le contrecarrer.

L'aspect psychologique est probablement le plus intéressant, mais très difficile à catégoriser succinctement. De nombreuses personnes sont outrées par les actions du gouvernement et des entreprises privées pour "restreindre", c'est à dire monnayer, l'accès à la "culture" (si on peut appeler ainsi les séries TV et tubes musicaux).
Mais à moins que le possesseur de l'oeuvre ne décide de l'offrir gratuitement au public, il n'y a aucune raison objective pour que l'acquisition de cette propriété intellectuelle soit gratuite, et ce même si elle a déjà été diffusée gratuitement sur des supports tels que radio et TV, payée dans ce cas par un abonnement ou les recettes publicitaires.
Au final, la plupart des arguments en faveur de la gratuité relèvent soit de politique anti-capitaliste un peu fallacieuse (avis aux fans de Lady Gaga: elle est tout ce qu'il y a de capitaliste) soit de justification pour ce qu'il reste un vol.
Les majors du disque ont essuyé des pertes financières lourdes, et cherchent donc à rentabiliser leurs oeuvres. Madonna n'a certes pas besoin des 20€ de la vente d'un disque, mais les ingénieurs du son, camionneurs, comptables, et tous les employés du label, du magasin de vente, et des intermédiaires souffrent des baisses d'achat.

Pour les compagnies en question, il n'y a que peu d'issues, pouvant être menées parallèlement:
- un combat d'arrière-garde légal en faveur de la répression, ou des barrières technologiques. Dans les 2 cas, cette solution est peu efficace, le nombre de pirates faisant que la loi et dépassée et les protections vite battues
- la recherche de nouveaux modèles économiques dans la cadre de la gratuité de l'oeuvre. Downloaders, ne venez pas vous plaindre si les placements de produits dans les oeuvres se multiplient. A quand un coca-cola dans "La Guerre des Trônes"?
- une voie intermédiaire consistant à proposer le produit à un moindre coût. Si cette alternative semble attirante, elle comporte un risque majeur, qui est celui que les utilisateurs ne sont pas forcément prêts à payer du tout pour l'oeuvre. C'est particulièrement vrai si la baisse des prix entraîne une baisse des budgets et donc de la qualité

De façon intéressante, cette problématique s'inscrit dans le coeur des évolutions les plus importantes et constantes du monde moderne:
- globalisation: un pirate peut mettre un programme en download pour des utilisateurs du monde entier, la traduction étant rapidement effectuée par des groupes locaux
- régionalisation: malgré la globalisation, un des solutions proposées consiste à rendre les oeuvres plus locales, afin d'intéresser des publics spécifiques, plus susceptibles de payer pour une oeuvre
- décentralisation: des petits groupes ou personnes isolées peuvent maintenant accéder à de nombreuses oeuvres ou les pirater facilement
- développement technologique, de nombreux foyers regardant des vidéos sur ordinateur, ou smartphone, et les faisant passer à d'autres utilisateurs, d'où d'ailleurs la montée en puissance de la vidéo on demand (VoD) comme moyen de vente des oeuvres culturelles.