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5 Things I Know About Marketing – Wharton’s Barbara Kahn

Barbara Kahn is the Patty and Jay H. Baker Professor of Marketing and the Director of the Jay H. Baker Retailing Center at the Wharton School, University of Pennsylvania. She will speak at MSI's May conference, Thought for Food (and Drink). In April, she talked with Executive Director Kevin Lane Keller about brand marketing, omni-channel strategies, and the power of perception.

1

With more brand marketing dollars directed toward social media, strategies are now focused on getting customers to talk to each other about the brand. 

This is a fundamental shift. Brand marketing is no longer one-way communication directed to customers, but is about convincing customers to converse with each other. This shift removes the direct control marketers used to have over their brand positioning strategies.

So the question becomes, what is the best way to get the brand into the conversation? One approach is to create content that gets the conversation going. Here, marketing has to create content, stories and events that interest consumers and encourage them to share.

Another way is to see what people are already talking about and inject your brand into that conversation. For example, when Michael Sam was recruited by the National Football League as the first openly gay player, everybody knew that people would be talking about him. What Visa did was promote by social media that he was the Visa card spokesperson. They knew that the conversation was going to be about Michael Sam, and so the fact that he was Visa’s spokesperson would be germane to the current conversation and likely to get social media attention.

2

Retailing is becoming a seamless omni-channel experience; it is no longer about online versus offline. 

Consumers are channel agnostic. They want to browse and shop 24/7, online and in the store, and on their phones. Consumers may browse online and try on in the store (webrooming), or the opposite, check it out in the store and buy online (showrooming). Smart retailers are purposely designing omni-channel strategies, such as buy online, pick it up in the store, or allowing for in-store returns of online purchases. Most of the data show that customers who buy across channels are more profitable.

From a consumer point of view, the process should be seamless but from the retailing angle there are complicated logistics and inventory issues, and employee incentive and compensation issues that must be addressed.

Even as online sales increase, no one is predicting the death of brick-and-mortar stores. But the overall shopping process is bound to change with these new behaviors and offline stores must evolve. From the state-of-the-art in-store tech in Rebecca Minkoff’s stand-alone stores to the experiential marketing around food, beauty, and health in NYC’s Duane Reade stores, the successful retailers are becoming more experiential and giving the consumer more reasons to come into the physical stores.

The opposite is occurring too. Pure play online retailers are recognizing the synergistic advantages of having physical showrooms or stores. And with the advantage of extensive data analytics from web behavior, these newly developed stores are designed to be more responsive to how customers actually want to shop. For example, the Birchbox model (a subscription service where subscribers are shipped a monthly box of cosmetic samples and then can go to the website to buy bigger sizes) gave managers the chance to observe consumers’ natural and preferred buying habits. They discovered that, unlike in traditional cosmetics retailing where product is arranged within brand, when consumers were left to their own devices, they shopped by category (e.g., lipsticks, mascaras), not by brand. Birchbox designed their physical stores to reflect these learnings from observing web shopping behavior.

The line is also blurring between traditional advertising media, such as magazines and retail stores. Flagship stores in urban centers on the most prominent boulevards (e.g., Fifth Avenue, Champs Elysee, Bond Street) are brand builders rather than traditional retailers designed to maximize sales per square foot. And content media, such as Net-A-Porter, can directly sell product. Thus, the magazine is a retailer, and the store is brand-building advertising.

3

It’s striking how powerfully you can change behavior based on just changing perceptions.

I’ve looked at variety for a long time, and now I’m interested in how consumers behave when actual variety is the same but perceived variety differs. I have found that even subtle perceptual changes in how an assortment is depicted (e.g., whether it is oriented horizontally or vertically) can affect perceptions of assortment variety and these subtle changes can result in significant differences in likelihood to purchase, amount of variety chosen, and quantity purchased or consumed.

Holding actual product constant but changing the perceptions of those products by changing packaging design and/or the shape of the product can also yield significant changes in consumption quantities.

In marketing, everything consumers do is based on their perceptions, and perceptions are not always accurate reflections of the truth. People believe what they want to believe and they don’t seek disconfirming evidence.

4

In mature markets, as significant differences in price and/or quality become more difficult, firms are competing on design advantages.

It’s just amazing to me the high expectations that people have for design features. High standards in design are now expected across the continuum of products from trash cans to office supplies to bathroom amenities to designer handbags.

Of course design has been a large part of fashion and luxury products, but now it’s extended to every part of life. Both men and women are being held to the same high standards. Design expectations even affect pedestrian communication objects such as the PowerPoint slides used in my class. If my slide designs seem out of date, students wonder how I can possibly be communicating state-of-the-art marketing science.

5

In this globally connected transparent world, the brand must be authentic and trusted.

In a global inter-connected world, it’s hard to keep secrets. If a firm is not at its core authentic, someone will discover that and the news can spread very quickly. This type of accountability is a really good change and it forces firms to do the right thing for the environment and for their customers.

Accompanying this change in technology that is facilitating transparency is a change in values expressed by the millennial and generation Z consumers. They demand and expect socially responsible firms. Unlike previous generations, these consumers are more apt to pay a premium for socially conscious brands, and these are the firms they would rather work for.

If marketers are glib and telling “convenient” stories to fit different circumstances, they are likely to be discovered. As Bill Bernbach, the famed advertiser, is purported to have said, “I’ve got an idea, let’s tell the truth.” Never more relevant and prudent than now.

 Five Things I Know About Marketing Series

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