Market Research

As I read chapter three of the text book, Understanding Markets and Customers, I couldn't help but think of an incredibly interesting and well written article I recently ran across in the New York Times by Charles Duhigg called "How Companies Learn Your Secrets".  It's mostly about how companies use big data, analytics, and customer behavior for market research and segmenting, even going so far as to recognize when women are pregnant before they've told family members.

It also contains the story of how Febreze, one of Procter and Gamble's most successful products with sales of over a billion dollars, almost flopped but was saved by research and a new marketing strategy.  This article shows the real world application of everything discussed in the text book (and even more).  It's a fascinating read, even if you're not studying marketing.

http://www.nytimes.com/2012/02/19/magazine/shopping-habits.html?ref=general&src=me&pagewanted=all&_r=0

The Value of a Mission Statement

The title of this blog is probably a bit misleading to most who read it, especially if they’re in an MBA marketing class.  You see, I’m not really sold on the idea of a mission statement.  Sure, the idea sounds great in theory and there are certainly many very successful companies with mission statements.  The mission statement strikes me as an idea doled out in a management curriculum and now used in businesses everywhere because everyone else is doing it.  Let’s take another seemingly overused word and ask if there is true “value” in mission statements.  I’m willing to concede I may be wrong on this, but I think the value is little to none, possibly even, dare I say it, “value” destroying in the fact that it seems like a bit of a waste of time.

I first came into contact with mission statements when I was in the Air Force.  Over my 20 years in service, I seem to recall reading about some new mission statement every 3-5 years.  I viewed them as platitudes at best and managerial drivel at worst.  Of course we also had our fair share of vision statements thrown in there so we could see where we were going with our mission statements. 

Just to make sure all the bases were covered we even had an official motto, which was essentially a slimmed down version of the mission statement.  You may recognize some of the words that the Chief of Staff of the Air Force, a four-star general and member of the Joint Chiefs of Staff, spent time thinking about and declared would be our motto, “Aim high… fly, fight, and win.”  The “aim high” was part of a recruiting ad campaign while the “fly, fight, win” part was an early slogan.  I liked the fly, fight, and win slogan.  It was catchy, simple, and to the point.

Enough about the beguiling motto, let’s get back to mission and vision statements.  Here is an example of a USAF mission statement circa 2005:          

“To deliver sovereign options for the defense of the United States of America and its global interests - to fly and fight in air, space, and cyberspace”

I guess our mission then was to fly and fight, but not necessarily win.  And it was important to make the distinction we were flying and fighting for the US and not, say for example, Canada.  I do have to admit being a little fuzzy on how one flies in cyberspace.  Anyway, at the same time the vision statement was “Global Reach, Global Power.”  Three years later in 2008, we got a new Chief of Staff and a new mission statement:

“To fly, fight, and win ... in air, space, and cyberspace”

Finally, we were back to our winning ways!  And somewhere along the way the new vision statement became “Global Vigilance, Global Reach, Global Power.” 

Just this year, the latest Chief of Staff refocused the Air Force vision statement to “The World’s Greatest Air Force — Powered by Airmen, Fueled by Innovation.”  This guy obviously went to business school.  Maybe in a couple of years when I’ve completed my MBA I’ll understand how this is a vision and not just another slogan.

I point all this out because the United States Air Force, and its predecessor the Army Air Corps, has been the premier force in the air since the early 1940’s.  It mattered little what the mission statement was or if, as in the early days, we even had one.  It’s not the mission statement that counts, it’s the mission – supporting ground troops with air strikes, transporting much needed supplies, delivering aid and disaster relief, providing air superiority, performing aeromedical evacuations, gathering intelligence, and much more.   These are the things we did and others still do today.  We do them better than any other nation in the world and it has nothing to do with mission statements.

Marketing Myopia

The article “Marketing Myopia” written by Theodore Levitt in 1960 is still as relevant today as when it was first written.  Levitt argues that the railroads didn’t take advantage of passenger rail service because they viewed themselves as railroad companies rather than transportation companies.  Likewise, he points out the many movie studios that ceased to exist because they erroneously thought they were in the business of making pictures rather than in the entertainment business. 

Since the article was first published there have been other companies with marketing myopia, branding themselves too narrowly and ultimately going out of business.  Kodak and Polaroid are two that come to mind.  Both of these companies failed to innovate when digital photography came along, choosing to stick with their tried and true forms of film. 

Reader’s Digest and Border’s Books are two more companies that failed because of how they defined themselves.  Reader’s Digest did in print (taking interesting stories, informative articles, and humorous pieces from other sources and aggregating them in one place) what companies like Yahoo do today on the web.  They defined themselves as a publishing company, yet they failed to publish on the internet until it was too late.  Sure, Reader’s Digest has a website now, but they’re irrelevant and not likely to last.  Border’s was done in by Amazon because their definition of a book was one made of paper.  Barnes and Noble may be struggling, but their Nook shows they know there’s more than one way to read a book.

The companies named so far failed because, much like the railroads and movie companies mentioned in Levitt’s article, they limited their scope by not realizing what business they were in.  The opposite can also be true.  The Radio Corporation of America, or RCA, is a great example.  A spinoff of GE, they were one of the original tech companies in the 1930’s.  However, by the mid 1970’s they were a conglomerate with no focus.  Some of their businesses included rental cars, frozen food, carpeting, and greeting cards.  This is the prime example of not knowing what business you’re in.

On the flip side there are many great companies that, knowingly or not, succeeded by following Mr. Levitt’s advice.  Disney started as a cartoon about a mouse.   The mouse is still prominent, but they are a major entertainment company with interests in movies, television, sports (ESPN), theme parks, and branded merchandise.  Nike started as a shoe company for runners, but is now the most dominant sports apparel company on the globe.

Coke and Pepsi aren’t in the soft drink business.  Coca Cola is the world’s largest beverage company with brands such as Minute Maid and Dasani.  Pepsi, along with owning Tropicana and Gatorade, is one of the world’s largest snack food companies with Frito-Lay and Quaker Oats.  Had these two giants of industry labeled themselves as merely soft drink companies they would certainly still be in business in one form or another, but it’s doubtful they would be the globally successful companies they are today.

Marketing in an Ice Storm

I had just finished watching the Jeff Bezos video and was in the process of updating my blog when the power went out.  Even now, two days later, I’m posting this blog using someone else’s electricity and internet service since a severe ice storm has downed power lines all over the place. 

I live in rural western Arkansas in a small town with only two grocery stores, Wal-Mart and a local non-chain grocer called James’ Super Foods.  The Friday morning after the big ice storm James’ was about the only place in town open.  Even mighty Wal-Mart, the largest retailer in the world, couldn’t open their doors.  It was at the small grocery store where I saw Bezos’ number one thing that he knows, you must focus on the customer, in action.  The owner of James’ was there (I know it was him because his shirt had “James” embroidered on it) coordinating deliveries, ensuring the linemen working to fix the power lines were fed from the deli, allowing people to write checks despite their system being down, helping people find batteries, and passing out fresh brewed coffee to customers standing in line to check out. 

As the only place in town open yesterday morning, James’ was for a short time a monopoly and the products he sold were essentials that people needed to survive.  The lines were guaranteed to be long.  James the man didn’t need to be in the front of the store handing out free coffee for the shelves to be emptied, but he was seeing to his customers and their needs.  I don’t know anything about his business background, whether he has studied marketing or worked his whole life in retail, but he seemed to have a sense of what was important and for taking care of the customer.  I think it can best be described by the couple that was leaving as I went into the store.  They were pushing a cart full of groceries and holding steaming cups of coffee.  As I walked past, the man said to the woman, “James is my hero.”

"What you call love was invented by guys like me to sell nylons"  -- Don Draper