The Hutch Report

The Digital Marketing Mix

By | Business, Marketing

The new economy and our increasing digitised world seems to have outmoded many classical business concepts. What seemed logical from a business standpoint in the traditional sense now seems less logical from the digital point of view. Should businesses be thinking about tossing out all these old concepts that make less sense and start thinking fresh from a digital sense? Then again, has the digital hype become so great that we forget that most of the world’s economy still runs in a traditional sense and that we should merely be thinking about adapting concepts to digital models instead of having them replaced?

A real digital economy is one that is purely digital, such as information that is produced digitally, marketed digitally,  distributed digitally and sold digitally. With this definition we are able to quantify what percentage of the economy is in fact digital, which is in fact still a small portion. We know that the greater economy does not function in pure digital form, although the hype would lead you to believe this is so. If you purchase a bar of soap through a website, it may have been marketed and sold through the website but the bar of soap is still a physical object. This means that it must be produced in a factory, stored in a warehouse, and distributed to the end customer by physical means. So what we have is essentially a hybrid where the digital tools have replaced certain traditional means of doing business but not all (I don’t think you will ever see the day where we wash ourselves with digital soap).

With this in mind, businesses should be thinking about which digital processes occupy their activity chains and determine how traditional concepts can be modified to suit them, instead of rethinking the wheel and replacing them completely. As an example, we looked at effective marketing strategies in the traditional sense to see how they can be modified to accommodate the digital extension of business.

We start by looking at traditional marketing and the obvious place to begin when thinking about effective marketing strategies is the consumer. Every company’s reason for being is based on satisfying the customers wants and needs with the firm’s products and services in order to generate profits (we will not consider non-profit organisations here).

Consumers tastes vary greatly, which makes it extremely difficult for any one company to serve everybody (although Amazon is sure giving it a good try). In order to make sense of all the consumer variablities in the market, the first task at hand is to separate the market in to homogeneous segments. This way companies can better identify and analyze what really makes them tick. They will do this by asking such questions as what problems are the potential customers having that we may be able to solve better than others? Who else is experiencing these kinds of problems?

Once this is done then the company will attempt to align what it is offering with what the consumer wants or needs. Hopefully they do that properly and the segment becomes profitable for them.

In order to do that, they position four classic strategies in a way that will address the consumers wants and needs correctly and convert that into profitable sales. These classic strategies have come to be known as the “Marketing Mix” and they include: Product strategy, Pricing strategy, Distribution strategy and Promotional strategy.

Product strategy: This includes decisions about the product and its uses, packaging, branding, trademarks, as a few examples.

Pricing strategy: This includes the challenge of setting a justified and profitable price point.

Distribution strategy: This includes the selection and management of marketing distribution channels and the physical movement of goods from manufacturing to the end consumer.

Promotional strategy: This includes personal selling, advertising, publicity and sales promotion tools such as brochures.

In order to provide a simple example of this mix we will take a look at Ferrari Cars. Product strategy – they are a luxury item, therefore they are branded as such. Details of the product are all of the highest quality. The name represents luxury and automobile craftsmanship at its finest. Pricing strategy – because the product is represented as high quality and requires expensive quality materials to produce, the price point represents this fact and retails from between $188,000 and $400,000. Distribution strategy – Ferrari cars will only be sold in exclusive dealerships seeing that they cater to a very select market, and such a luxury goods consumer would accept the fact that there is not a Ferrari dealership on every street corner. Promotional strategy – their promotional strategy has to represent their product so you won’t find any flyers in your mailbox advertising “20% off if you purchase a Ferrari before Friday.”

So now, in the hybrid digital world what has drastically changed for Ferrari? The product is still a luxury car. The pricing strategy hasn’t changed to reflect that. That is to say, you are not going to get 20% off of a Ferrari if you purchase it online. The distribution strategy doesn’t change because the physical object still goes through the distributor channel to the end consumer. Essentially, we can say that the promotional strategy has changed. Instead of a nice glossy brochure (which they still have) you can get all the information you need online. The website looks high end but today you can have a luxurious looking website and sell inexpensive chocolate bars. Communication has not changed much although you get the advantage of more means of communication but so does everybody. In any case if you are going to purchase a car for $200,000 you probably want to speak directly to the seller.

What about the pure digital world? This is where the modifications have to take place because the lines become blurred.

Product strategy – This becomes a content strategy which means we are speaking about a digital good such as a book, piece of software, application etc. Product strategy can now become a bit more difficult, especially if you are thinking of branding yourself as a luxury digital product. Does this category even exist?

Pricing strategy – Because of the digital world businesses have now gained efficiencies and are given additional margin to work with so they can play with price a bit more depending on who they are selling to and what their competitors are doing.

Distribution strategy – In digital form we have the whole world at our doorstep. The strategy becomes which distribution channel to use, YouTube? Website? Instragram? or simply email?

Promotional stategy – The digital promotional strategy can still employ traditional tools such as radio/podcasts, Television, Billboards, Magazines etc. or it can be purely digital using such tools as Twitter, a myriad of websites to advertise on, Facebook, Google adwords, Instagram, YouTube or simply your own website. However, here we see that the lines can become blurred because now your distribution channel also doubles as your promotional channel.

Therefore, businesses have to take special care in thinking about how they position themselves in the new economy and what strategies they use. The most important aspect, which many businesses forget is the customer. If your segment market is 50 – 60 year olds then you have to communicate to them in the proper way and through the proper channels. This segment is not a big user of Snap Chat or Instagram so you have to change accordingly.

So, regardless of whether your product is physical or digital, there are some fundamental questions that businesses should not forget to ask;

Who are my customers? (How old are they? What is their profession? etc.)

Where are they located? (in the digital world, an Italian may be visiting your site, are you selling to them? If you are there are a number of cultural issues to consider).

What need, want or problem are we solving for them? (So many companies are in the “build it and they will come” frame of mind. A nice to have product is very difficult to sell).

Providing something of value that somebody is willing to pay for has not changed for thousands of years. The new economy and digital world does not change that fact. There are numerous articles outlining all kinds of traditional marketing strategies and digital strategies which are valid, however, many often still forget the reason for being in business and that is to satisfy a need. If your business concentrates on the end customer and how his or her needs are being fulfilled by your business, and work backward from there, the chances of success will increase regardless of if your product/service is physical or digital.

The “Follow Back” Button on Twitter – Who Benefits?

By | Business, Marketing, Psychology

John Harper lives in Pine Village, Indiana.  It is a beautiful little town with lots of friendly folk who are always willing to help their neighbors or visitors in need. The population is only 217 so John knows just about everybody in town and everybody knows John.

John works at a local factory and although he enjoys his job and being with his fellow workers John has always had dreams of having a bit more. He has always had the desire to be an entrepreneur and reap the financial rewards of being his own boss. After years of being at the factory, one day the opportunity presented itself. John jumped at the chance, left his job and set his plan to put his dreams in action.

John took his savings and started a small business selling jean jackets. John stated, “I mean, everybody wears them around here, what better business to start!” He opened his shop on the main street of town. Soon everybody knew about John’s shop and was stopping by to say hello. They, of course, wanted to help out the best they could so they purchased something from John. Right off the bat, the shop was doing great sales. Jean jackets were popular in Indiana since there were a lot of farmers and that is what they like to wear. Most people in the town could be seen wearing John’s jean jackets.

After a few weeks, sales suddenly slowed to a drip. After a quick analysis of the situation John suddenly realized the problem. The main reason was that jean jackets are quite durable. Once you purchase one you can wear if for quite a while before it wears out and needs replacing. Remember the population of Pine Village was only 217 so John quickly realised he needed to go outside of Pine Village and even Indiana if he wanted to seize the chance of selling more jean jackets and grow his business.

John came to the brilliant idea of sending out a flyer with a bold message saying, “I will come to see your shop, if you come and see mine.” John thought that if these shop owners came to visit they would see the quality of John’s Jean Jackets and want to buy them. John sent this out to jewellery stores, grocery stores, hobby stores, banks, lawyers offices etc. He sent the flyers out to every business he could think of.

After a few days some replys came trickling in. “Sure John, come and check out our shop and we will come and check out yours.” You see, these stores were thinking, “If John comes to visit our shop he is going to see our quality products and services and buy from us.” Soon John was spending most of his time visiting fish stores, furniture stores, gift shops etc. In return, these people came to visit John’s shop.  There was one big problem. John didn’t need any furniture or gifts so he never purchased anything from the shops that he visited.

John’s shop in return got lots of visitors from the fish guy, the bank clerk, the grocery clerk etc. However, there was another problem. None of the visitors bought anything from John’s shop. They liked it, and sometimes complimented him on it but there were no purchases. John began to get worried because in spite of the shop being so popular and having people come and go all day long, there were no sales. Eventually John did get a couple of sales from a few farmers that lived a few hours away in another county but nothing that could help sustain the business.

After a year, John’s store had thousands and thousands of followers but no sales. John didn’t purchase from anybody else because he had no money left seeing that his business was not doing well.

After wasting all his time and effort visiting other stores outside of town and entertaining those that came to visit him John eventually went into bankruptcy. The store was hugely popular but couldn’t make a dime. John ended back at the factory.

A few months later, all the guys at the factory started opening up Twitter accounts, as Twitter started to become hugely popular, so John did the same so he could stay in contact with all his pals. As he read his Twitter feed from day to day he decided to follow a few other accounts of people that he admired in addition to some news feeds that he found interesting.

Then one day a strange thing happened. John began to have a bunch of people follow him with the request that John follow them back. John shut down his computer and began to laugh. He realised his time might be better spent hanging with the local town folk.

The Hutch Report

Perfection Marketing

By | Business, Marketing

Our digital economy along with the proliferation of social media has brought about some very powerful channels of communication. In spite of all of the benefits of these channels they have also managed to magnify a darkside.  There is a form of marketing that we like to call “Perfection Marketing.” This applies to presenting your product or service to be something that it is not, or otherwise said marketing perfection.  The whole foundation of marketing is how to take your product and present it to the consuming public in the best way possible, in the hopes they will purchase it.  Although the presentation of perfection has existed for some time, the platform of social media has expanded its reach and speed of delivery. Not only do companies fight to claim their positions of perfection, but so do many of the participants in social media.

Companies use perfection marketing strategies in various ways. One way is through “puffery.” Puffery is characterized by exaggeration and hyperbole. “The best hamburger in the world” is an example of an exagerrated claim that would not be taken seriously by any reasonable individual. Advertisers use exaggeration and hyperbole to get people’s attention and make their message memorable. Because the claims in puffery are obviously exaggerated, and because exaggeration works to get people’s attention, puffery is an accepted advertising technique. These claims are subjective and a matter of opinion, therefore, they can’t be measured, so they are not challenged. Claims such as “The Best,” “The Tastiest,” “The Freshest,” “The Fastest,” or “The Smartest,” are used freely. These superlatives project the idea of perfection. Sometimes companies may push the boundary of puffery, which leads to deception. This is illegal and can be challenged. Irregardless, the intention remains the same, to position the product or service as something much greater than it is.

“If you look for perfection, you’ll never be content.” — Leo Tolstoy

In addition to descriptions and messages, it is very apparent in illustrations and photos. Very rarely do products represent in real life what we have been lead to believe from photos in magazines. Restaurants and Cosmetics companies are probably the biggest perpetrators of this strategy.  Along with the tagline “The Perfect Cup of Coffee,” you will be presented an image of what somebody believes to be a perfect cup of coffee (and before you have even tasted it, the idea as been imprinted upon your brain). Cosmetics companies reinforce this idea of flawlesness and perfection with the publication of every beauty magazine.  So much so that in 2016, Americans spent more than 15 billion dollars on combined surgical and nonsurgical procedures for the first time ever.

The Hutch Report Cosmetic Surgery

Just about everything we see in the media is in some way fake: Photos of bodies, women’s, men’s or other, packs of gum, new cars, cell phones, bottles of beer, bread, apples, iPhones, everything. There is constant societal pressure to adhere to this idea of perfection. Any advertising product that appears in the media has been meticulously lit, retouched, and airbrushed. Have you EVER ordered a McDonald’s Big Mac and received anything that ever came close to resembling what you have seen in their advertisements? That hamburger does not exist; it’s a fake, idealized, made-up image of someone’s imagined idea of the perfect hamburger.

However, this manipulation seems to work, because perfection somehow lies in the human character and we tend to try and move towards it. So we get sucked into thinking we can be perfect, which unfortunately for many ends up causing great disillusionment and pain.  Social media has exacerbated this by providing a greater distribution platform and tools that allow anybody to photoshop anything, including themselves and present to the world. In addition, they use it as a weapon against others.

The idea of perfection has in fact become the image of a sad world.  The more I think about it the more I start to dislike the idea of perfection. Stop and think about what it would really mean to be perfect. The idea of perfection insinuates that there is nothing better.  There will be no more improvement or discovery. It is the best that you will ever get. It is the be-all and end-all. It is the example that everything else in its class is to be compared against.  Nothing will ever surpass it.  After all, how could you surpass perfection?  If you could, it would imply that perfection didn’t exist in the first place.  It sounds pretty sad, knowing that nothing would ever be better again than what you know now.

The truth is that perfection is essentially a myth. No one has ever seen perfection in any form, and if they think they have, it would be very difficult to prove its validity. In reality perfection can never exist. For something to be truly perfect, the whole world would have to agree on that fact and every other competitor would have to be accounted for.  I doubt you could even get everybody to agree that the sun will come up tomorrow.  There will always be someone that will disagree. We all see things differently; therefore, one person’s idea of imagined perfection would only be their own, and just that, imagined. It is therefore a MYTH.  This is the main reason companies can get away with puffery.

So what does a perfectionist even look like? To start, being defensive is a trait of perfection.  If you are criticized and you don’t like it, it is because criticism means imperfection on some level.  So you naturally defend against it. Are you obsessed with failure? Do you always focus on what is not working? Are you all or nothing? Meaning, if something doesn’t work for you then you quit it immediately. We are, in fact, conditioned to be perfect. Think about our society.  Who has ever rewarded failure? We always reward the results. We never reward the journey, the attempt to at least try something new.

The signs of this conditioning and constant manipulation are everywhere in society and are having detrimental effects. Psychologically, it is self-destructive trying to measure up to what others see as perfection.   This is particularly apparent in Woman’s magazine ads. It is all or nothing, either I look like that or I am inferior. It is not surprising that one falls into a spiral of self doubt and depression when they come to the realization of how far off they are from the mark.

Is there a way out of this downward spiral? Yes, there is. The first step is accepting the idea of perfection as a myth. We are not perfect and never will be. But rest assured, nobody else on this planet will be perfect either and it is that diversity that makes it a great place to be. Stop focusing on the ends and more on the means. Be an individual, unique from everyone else, as everyone is. Being unique is your greatest asset. Nobody else in the world is like you. Show it and use it to your advantage.

The second step is to focus on excellence rather than the idea of perfection. Excellence is the quality of being outstanding or extremely good. Someone who strives for excellence and not perfection is someone who is open and welcoming to suggestions.  A person working towards excellence enjoys the process of moving forward, including the failures that come with the journey.  They are constantly learning and getting better by way of those failures. You can always be better tomorrow than you were today. That alone is an uplifting thought. A person striving for excellence is realistic and understands what reality really looks like, including the hamburger, and they certainly don’t give up on the journey, because the journey is the greatest part of the experience that last a lifetime!

The Hutch Report

The Rational Price

By | Marketing, Psychology

Price is all around us and our contemporary society has managed to come up with a myriad of ways to refer to price over the years.  You pay rent for your apartment, a tuition for your education or a fee for your dentist. Airlines, railways, taxis and bus companies all charge you a fare. Local utilitiy companies talk about the rate they charge you and your bank will charge you interest for the money you borrow. The price for taking your car on to the ferry or the price you have to pay to use a highway or a bridge is called a toll. The company that insures your car will charge you a premium. Clubs or societies to which you belong may make a special assessment to pay unusual expenses. Your lawyer will ask you for a retainer to cover his/her services. The price of an management executive is considered a salary, unless you are a salesman, then it may be a commission. A worker will recieve a wage. Finally, income taxes are what we pay for the right to earn money, hence the name tax on income, (although an economist would probably disagree).

Everything that we pay a price for has some kind of utility, or something that will be useful to us. The importance, worth, or usefulness of that something is also considered value (the terms utility and value and used differently among economist so to simplify things I will just refer to value). The price of something is a mechanism that allows us as consumers to make a decision.

Price is probably the most influencing factor for buying because consumers are rational. What makes them rational is the fact that they have limited income as well as a limited budget. An irrational consumer that spends beyond his or her means are quickly pushed into insolvency. Although there are an increasing amount, it can be agreed that the majority still act in a rational manner.

Making a decision on price, however, is not always the easiest thing to do for consumers. Price is not only the amount that customers pay for utilizing a product or having a service. There are a number of psychological factors that impact how they feel.

Companies can sustain themselves in the market if and only if they can make a profit, which totally depends on price. When a company is going to determine the price of a product or service they need to first understand their cost of the product/service offered. No company that prices a product for $5 but cost $10 to produce can survive for long. They need also to think about the rationality of pricing; that might include the product’s quality, availability of the alternatives in the market, types of products and the category of entry into the market. A company’s pricing determination can be incredibly complex and not in the scope of this article.

We want to look at what a consumer is confronted with when making a purchasing decision and how they can improve their ability to make the best decisions with the information available to them. Dan Ariely described how what may seem a simple purchasing decision, is not always so simple for the consumer to make.

“Consider the following situation as an example: You are thirsty, tired, and annoyed and just want a cup of coffee. You see two coffee shops across the street from each another. One is a specialty coffee shop that sells handcrafted, designer coffee and the other is Dunkin’ Donuts which sells standard, decent coffee. The price difference between the two options is $1.75 for your cup-a-joe. Now, how do you decide if the benefit of the handcrafted coffee drink is worth the additional $1.75? What you should do (if you wanted to be rational about it) is consider all of the things that you could buy with that $1.75, now as well as in the future, and decide to buy the expensive coffee only if the difference between the two coffees is more valuable than all of those other possibilities. But of course this computation would take hours, it is incredibly complex, and who even knows all the possible options to consider?”

So what does one do to make the decision? Dan Ariely states that in place of making decisions “correctly” we adopt simple rules or what academics call “heuristics” (heuristics are simple, efficient rules, learned or hard-coded by evolutionary processes, that have been proposed to explain how people make decisions, come to judgments, and solve problems typically when facing complex problems or incomplete information.) Simply put, we will decide what we have always decided. If you have purchased designer coffee in the past and have been content to pay the additional price then you may well do it again, whereby it becomes a habit. However, if your financial situation changes then your purchasing habits will most likely change. It may become a better option to go for the Dunkin` Donut’s coffee and pay a bit less.

By examining these habits, and quitting them when it makes sense to do so, we might actually discover ways in which we could reduce our spending on a long-term basis. Or more to the point, we may discover where we are paying more for less value received or paying less for more value received.

In addition to analysing your current purchasing habits in this way you may want to do some deeper research and discover your true motives for purchasing a service or product in order to establish some better buying habits from this point on.

We make our purchase decisions from a rational point of view or an emotional point of view. However, Professor Baba Shiv of the Graduate School of Stanford Business points out that 90 to 95% of our decisions are made by our emotional brain, even if we think we are being rational the emotional side will always win out. (Clotaire Rapaille goes deeper into this analysis in his brilliant book, “The Culture Code.”)

Below are a few examples of rational purchasing decsions vs. emotional purchasing decisions. You also have to keep in mind that your decisions may be based on a combination of both. However, when you are analyzing the emotional side, it is much more difficult to quantify the value. Companies understand this so they often market to your emotional side. This is why they pay athletes and celebrities millions of dollars to represent their brands. If I purchase a Nike product then it means emotionally I may be in the same class as Roger Federer, but how can I possibly value that emotion? I may have paid $40 too much!!

The price you pay for any product/service all comes down to the individual’s choice. Take a bit of extra time during your next purchase, regardless of the price, and try and discover your true motivation for making the purchase, and if emotional, what value does that mean to you. You may discover something new!

The Hutch Report

Faulty Marketing Strategies – Follow You, Follow Me!

By | Marketing, Technology

Follow You, Follow Me

This phrase used to have impact as the title of a classic Genesis song, but it has morphed into something much more banal since the advent of social media.

It has now become a marketing strategy that has no real influence and no real purpose, aside from stroking the human ego, yet many in Twitter and elsewhere have adopted it. These kinds of people are easy to find on Twitter. They have 15,000 followers and are usually following about 15,000 (just to name a number). Here is a clip from a blogger’s post on their strategy for gaining more followers on Twitter:

After about three days to give people a chance to follow me back, I go back and unfollow people who have not chosen to follow me – remember the goal of all this is to have a large, engaged following. So: If you have been followed by me you have something interesting in your profile or recent tweet. If you follow me I will continue to follow you. If you don’t follow me I will unfollow you after about three days. 

Unfortunately the title of this blog post was not “My strategy of contradictions,” or “Proof that I know nothing about marketing.”

Firstly, the author says his goal is to have a large “engaged” following. To have an engaged following means that people have followed you because they have found that you have something interesting to communicate. Something that fills a need. You are providing value to them in a way that others are not. Having people follow you just because you have followed them is far from the notion of being engaged.

Just for discussion sake, we could argue that there is an element of exchange, which is the foundation of marketing, whereby one side gets a new follow and the other side recieves a new follow. The big difference here is that in this type of situation there is no production surplus. If you are a plumber and I am an electrician, I will turn on your lights for you if you will install my toilet. We have exchanged our expertise returning value to both of us. Follow you, follow me can be equated to you put in my toilet and I will put in your toilet.

The author writes, “So, if you have been followed by me you have someting interesting in your profile or recent tweet,” and even though he says he has found something interesting, he promises to unfollow that person if they do not recipricate. Translation: In the end, I really don’t care who you are or what you have to say, if you don’t follow me back you are worthless to me. Another interesting thing about the post in question is that the author is talking about a Twitter marketing strategy yet he does not even think to post his Twitter handle in the article so that he may get a few more follows!

So, if I am only concerned that you follow me because I follow you then where is the value proposition? This is like a consumer going into a pen shop to sell the owner a pen. Is it not a contradiction to say that “I have followed you because I found a recent tweet interesting,” yet I am going to unfollow you because you didn’t do what I wanted?”

All organizations and people must create utility if they are to survive. The design and marketing of want-satisfying products, services, and ideas is the foundation for the creation of utility. So, what is utility? Utility is “the state or quality of being useful; usefulness,” something useful; a useful thing. The word has a long history and goes back to its latin roots from the word “Utilis.” Therefore, a properly oriented marketing system will provide utility that reflects consumer and societal needs.

Instead of “expecting” somebody to follow you back just because you followed them, you shoud be asking yourself the question “what value am I providing to this person?” Are they even your target market? This is where robots fail, because many people will do a search of key words and phrases to identify people on Twitter to follow, yet these descriptions don’t describe in any way what the real needs of this person are. To discover this requires more reserach and a greater level of effort on behalf of the curator.

Follow you, follow me is not a marketing strategy, it is a great classic song by Genesis!

The Hutch Report

5 Common Sense Ways To Enhance Your Business

By | Business, Marketing

On a recent trip to New York I set out to discover some new cool locations.  I hadn’t been there in a few years and was interested to see the changes.  I also wanted the time to check out a few restaurants, bars and stores that I hadn’t seen the last time around.  I didn’t want to make the same mistake as my other visits, and that was to arrive back home only to discover something that I would have loved to see while I was there, and was located only a few blocks from where I was staying, only to have it slip through my fingers.

I took some time to read some reviews of different places and check out their websites for more information.  Having spent enough time in different aspects of Marketing, I am always interested to see how companies are presenting themselves. I find it fascinating how one company can do so well and another, which on the face of it has comparable service and products, struggles. How does one bar attract such a crowd, when the bar down the street that is just as inviting, sells the same drinks at the same prices, can’t scrape together a handful of customers? It is obviously not enough to just look in from the outside to come to a conclusion why this may be.  You have to look deeper into the different aspects of the company, employees, services, advertising etc. Then there are times where it has nothing to do with the company. Times change. Customers are very fickle and as the great funk group “Tower of Power” put it so clearly, “what’s hip today might become passé”. If you are a company and you don’t change with the times you are left behind.

So, while staying in Manhattan, I planned my days and started off around the city taking in the sights. I had a list of cool rooftop bars, with reported spectacular views of the city.  I had my list of specialty shops and restaurants where I planned to stop for coffee or have lunch. I always make a point of walking. It is the best way to see the city and quite often the best way to discover local hangouts.

One by one I would arrive, step into the bar or restaurant, turn around and make my way out. I would double-check these places on my smartphone to make sure that I indeed had the right addresses.  There began to be a recurring problem.  With every stop I became more disappointed and more and more frustrated. What was going on here, this view sucks?  “This is not at all what I was expecting”, I said to my wife, after having given her a description of how this place had the best view, or the coolest atmosphere or the best New York Cheesecake. Were my expectations just too high?  After having walked so long and not found what we were expecting, we would get tired and frustrated and just settle for a corner fast food sandwich shop, or dare I say a McDonalds (at least we knew from experience what to expect!). Of course this only added to our frustration.

As I was walking down Madison Avenue one afternoon, taking in all the activity around me and thinking about what I had experienced, it suddenly dawned on me what was happening.  Their marketing was fantastic, or should I say one part of it.  The alluring photos and beautiful descriptions of all these places I had read about in brochures and articles, and visited on websites, had seduced me. The big problem was the real life experience was far from what I was expecting.  For the most part, all these establishments were “Overpromising and Under Delivering”. I am not the first to talk about this and won’t be the last, which indicates that businesses are not getting the message. This only added to my frustration. This is the basic premise of the marketing mix.  If you are selling a Ferrari then you don’t hand out flyers.  Inversely, if you are selling a coffee and muffins served in a bag, you shouldn’t be producing a 3 page glossy brochure to advertise it as a “Patisserie Sublime”.

These companies must be under the assumption that if they can get the customer in the door then 99% of the sale has been made.  In reality, they wasted my time and lost all their credibility. There is no way I would recommend any of these establishments to a friend.  In a city like New York, and the number of visitors and businesses in such a small area, you can’t afford to take those kinds of risks with customers. If you are going to “Over Promise”, then you better be prepared to “Over Deliver”.

You can fool some of the customers some of the time but you can’t fool all of the customers all of the time.  If you rely on trickery to build your business then you won’t have much time left.

Here are 5 basic ways of enhancing your business:

1) Don’t Overpromise

Be honest. Every business wants to portray themselves as something special but presenting an image that you know you can’t deliver is just setting yourself up for failure. A company that sets the bar too high is just sabatoging their own chance for success. Lower the bar to an honest level that you can deliver on, then do your best to go beyond those expectations.

2) Be Sincere

Have you ever encountered the “Hi My Name is Barbara and I am your server,” “How Y’all Doing Today?” “Excellent?” “Great!” employee in a restaurant? It can get to the point of nausea. Either the company has told them to act happy and smile no matter how rude the customer is, or they are taking happy pills in order to get that 15% tip.

Just act naturally and be sincere. Everyone gets in a bad mood but you don’t have to carry that over to other people, especially if you are having a bad day, but don’t fake it either. People are not stupid. As an employee don’t forget that you are also a customer to someone else. Simply treat people the way you would want to be treated.

3) Surprise the customer

Over here in Europe I have been to a few restaurants that offer the customer a Limoncello (Italian Lemon Liqueur) after the meal. Not everybody accepts it but the customer walks a way with a sense of appreciation at the gesture. Offering the customer something they are not expecting can go along way. This could also be in the form of calling a repeat customer by their first name. It makes them feel special and will therefore increase the chances they will be back often.

4) Don’t try and please everybody

Not everybody who has money to spend is your target market. Concentrate on only that part of the market that can benefit most from what you are selling.  There are 7 billion humans on earth and we do not all have the same needs and wants. If you are spending $3 to convert a customer who will only bring in $1 to the bottom line, there is a problem.

5) The Customer is not always right!

You are offering a service and your customer is paying for that service. This does not mean that you should be offering 10 times more than what they are paying, or be subjected to someone’s personal abuse because they happen to be in a bad mood.  There are customers that are not worth having.  You are better off leaving those customers to your competitors and keep the ones that honour the two way transaction and will become a repeat faithful customer for years.

The Hutch Report

The Perception of True Value and Pricing

By | Marketing, Psychology

Does the price of something equal its true value? While speaking with a friend in the Swiss luxury watch business the other day I learned that the cost of building one of their brand models was $6,000. However, then I learned that the watch would be sold for $45,000.  This got me thinking about the true value of goods in comparison to their price on the market.

There are many theories about pricing. In the area of marketing, pricing is one of the most important elements of the marketing mix, as it is the only part of the mix which generates a turnover for the company. However, no matter how much you theorize about pricing, it always comes down to the consumer’s personal perception of value. What is the product worth to the consumer?  How much would he or she be willing to pay? The interesting part of this assessment, taking place in our minds, is that we can be deceived to come to certain conclusions about what something is worth. The luxury watch is a perfect example. If the company lowered the price of their luxury watches too low, the consumer perception would change. The watch would no longer be perceived as luxury. They would probably sell fewer units at $100 than they would at $45,000.  This aura of extreme luxury is supported with the proper promotion, distribution and packaging.

“There is no truth. There is only perception.” — Gustave Flaubert

If you think that this human psychology trait has somehow changed because of the so-called new economy you would be mistaken.  A perfect example of this comes from the music industry.  There was a time when consumers expected to pay $15 or $20 for an album or CD. There was a perception of value.  The new distribution platform that we know as the Internet suddenly changed all that.  The advent of file sharing provided millions of consumers to exchange and download music for next to nothing.  What happened was the perception of the value of music suddenly changed. “I just don’t agree with perpetuating the perception that music has no value and should be free,” said, Taylor Swift. Well, I hate to say it Taylor but that is the direction that we have gone.  I am not convinced that the consumer currently has a concrete perception of the value of a digital musical file.

While working with a service based startup I was in charge of pricing a service that had no precedent.  There was nothing really to base the assessment of the value on. I could use every pricing theory in the world yet most of it was based on assumptions. I knew what the cost structure was, so I could set a floor price multiplied by the minimum number of service contracts we expected to sell in order to cover those costs. There was one major problem.  We had no revenues. We had no customers at that point. I had no idea if our price would meet the perception of value determined by the market.

During the same time, we started to see the proliferation of the Freemium model. Something we also considered as a company. Companies all around us were giving everything away for free. The theory was, if you could entice the consumer to use your product or service they may see how valuable it really is. Then you could start charging. The problem would remain though.  What price is the right price? Many of these companies went under because they lost most of their users once they began charging for the products. In spite of what many say, free or really cheap does not necessarily translate into more customers.  The price of a product or service has a perceived value by the market.  The challenge is to find that price that represents the value perceived by the market.

The best way to determine price is to test the market, as the market ultimately decides and sets an equilibrium.  Use focus groups or the like to help determine what the perception of value is. This is a widespread problem among many startups. They don’t test the market for their products or services, so they take a stab in the dark by picking a random price point or just giving it away, hoping to charge for upgrades later. This is a dangerous practice because once the market is influenced into picking up a bargain at lower and lower prices, those price points will then become the perceived value of the product in the market and that is very difficult to reverse.

The Hutch Report

Branding – Did you over pay for your logo?

By | Business, Marketing

At more than a few startups I was with, we had to come up with a logo for the company.  We did what most companies do, hire a design company, give them a description on how dynamic we are, and what we represent.  Then the designers come back with a few choices for the team to look at.

Mostly the designers are clever at giving modifications of a very narrow selection and in a sense often guide you into a direction before you have even seen the designs.

Then, in a small company, you go through the painful process of asking everyone’s opinion of the choices (as if it really makes a difference!).  Ask anybody’s opinion of something, even if they have absolutely no knowledge or experience to back up their opinion and they will give it to you.  This is about the time the arguments start.  People will argue until they are blue in the face in order to have the recognition of getting things their way or that self-satisfaction of being right.

I was in a small pharmaceutical company where this happened once.  What was meant to be a few minute get together between the marketing team and the rest of management to give feedback on the logo selection turned into an hour of bickering and arguing.  It got to the point where the CEO of the company lost his patience, and interest in any one else’s opinion, threw up his hands and said, “I am making the decision and I say we use the blue one”, “Meeting over!!”

The logo chosen by the CEO was used, placed on all the documentation and company communication and was never talked about again.  The company went on with its business, did a good job and grew in profits and revenues.

So it got me thinking of how much value do logos really have? I believe that the company’s success creates the logo.  The best logo in the world will not assure your company recognition that places you above all the rest.  There are millions of companies and logos of all sizes, colours and designs.

However, if you build some great products or provide great services that people use, provide great value for the price and you will grow as a company.  The more people who use your products and services will then become familiar with whatever logo you use (assuming of course that you haven’t done something self destructive such as making it illegible, or of bad taste).

Here are some examples:


In 1971, Phil Knight was teaching a class in accounting at the Portland State University. While there, he commissioned a graphic design student, Carolyn Davidson to create a logo.  When he bought the now famous “Swoosh” he told her, “I don’t love it, but maybe it will grow on me.”  The cost? $35.


Twitter purchased their logo from iStockphoto for about $15.  The designer of the logo, Simon Oxley, probably received about $6 for the job after fees. Twitter could have purchased any number of other designs and still have the same recognition and success that they have had with their service.


Sergei Brin, one of the founders of the company, created the Google logo.  He used a free graphics-editing program.  The logo has become so recognizable, not because of its brilliant design aspects but because a large percentage of the world’s population uses it everyday as a search tool. That’s how you become a brand!!


Stelios Haji-Ioannou launched the European based EasyJet as a low cost carrier back in 1995.  He was very conscious of keeping the marketing budget as low as could be. He, therefore, looked at all the other airline companies of the day and noticed not one of them was using the color orange.  He chose the lowercase Cooper Black font available in all word processors, colored it orange, painted it across the body of each plane and the rest is history.  Like it or hate it, the success of the company had little to do with the logo design alone, but everything to do with very astute marketing and publicity.  The cost was the time it took Stelios to conceive of the logo, which was not long.

Do you remember what the Logo for the 2012 London Olympics? Do you remember what color it was?  My guess is probably not.  The logo was designed by a London based brand consultancy company and cost the city $625,000. The rebranding of British Petroleum, Symantec, Accenture were all over $100 million dollars.  However that was the total cost of rebranding and not just the logo but we can imagine that the logo was not cheap. The big question would be, what was the return for the investment?

Graphic Designer and Art Director Paul Rand once said, “It is only by association with a product, a service, a business, or a corporation that a logo takes on any real meaning. It derives its meaning and usefulness from the quality of that which it symbolizes. Therefore, no matter how brilliant a logo in its inception and design, it will mean nothing if the company it represents is a producer of lousy products and services.

A good example of this is Ferrari.

Enzo Ferrari told the story of the prancing horse logo just once. “The horse was painted on the fuselage of the fighter plane of Francesco Baracca — a heroic airman of the First World War. In ’23, I met count Enrico Baracca, the hero’s father, and then his mother, countess Paulina, who said to me one day, ‘Ferrari, put my son’s prancing horse on your cars. It will bring you good luck.’ The horse was, and still is, black, and I added the canary yellow background which is the color of Modena.”

This logo would have represented nothing if it were not for the high standards that Ferrari set for his products. Instead, looking at the logo now and you see the reflection of high-end, quality, and performance.


Apple is another great example of reading too much into the importance of a logo. We can start with the simplicity of the name. Apparently it results from Steve Jobs having worked in apple orchards in Oregon, and stuck for another name, decided to name it Apple. Steve Wozniak describes the naming process as a simple one and that “anything that sounded interesting was valid”. So there really was nothing more to it.

The rainbow logo was designed by Rob Jannoff, of which today’s logo is still based on. Janoff said that the bite of the apple was added to ensure it resembled an apple and not a cherry. For anyone that has worked in marketing producing brochures etc. you will understand the costs involved in producing materials that are multicolored.

The rainbow logo remained for 22 years until Steve Jobs returned to the company in 1997. One of the main reasons for moving into a simpler form was apparently the production cost. Producing the colored logo was much more expensive, especially on the computers themselves. Michael M. Scott of Apple called the logo “the most expensive bloody logo ever designed”.

At the time The Beatles Apple Corp. logo was an apple.  They sued Apple Computer and settled for an undisclosed sum being paid to the Beatles Apple Corp. The apple logo choice at the time was actually not such a smart decision and ended up being quite costly. However, today the logo is iconic because of the products it represents, used by millions of consumers everyday. That is what made the logo and not vice versa.


Howard Shultz bought Starbucks in 1987 when they had six stores.  He reduced the product selection to just coffee and adjusted the logo accordingly.  The most recent adjustment to the logo was done in house at a minimal expense.  The changes over the years have been meant for simplification purposes and keep the look fresh, seeing that styles and fashion do change over time. In my opinion, Starbucks has done it right.  They could have spent millions on some high-end design branding agencies but that would have ruined it.  They have kept true to their origins at a reasonable.


There is the story of Virgin’s logo in the Richard Branson biography.  The way the story goes is Richard Branson and one of his associates went to meet a designer about the creation of the Virgin logo.  While Branson got up to go to the bathroom the designer asked the associate what the name of the company was.  The associate said it was Virgin, so the designer scribbled the name on a napkin.  When Branson came back to the table he saw the name Virgin written on the napkin and said, “Right, that’s it then.” That quickly written reminder on the napkin became the Virgin logo.

If you are a startup then you shouldn’t be thinking that spending a lot of money on a logo would attract business for you. Don’t over emphasis your logos importance.  This is not to say that the logo means nothing. It is your face and will be a communication tool to your market. Choose a logo design that you feel represents the quality of your products and services but you don’t need to bother paying for expensive design consultancy firms to do that.  Go and find a student designer (as in the case of Nike), I am sure they will do just as well and probably put more heart into the project, or you can just go online and choose an inexpensive one that way (as in the case of Twitter).  Then get on with the principle effort of building your customer base.

Trade Shows – The Real Winners and Losers

By | Business, Marketing

Trade Shows and Events have been around for a long time.  They happen in every industry. They are fun to walk around, maybe have a chat or exchange a few business cards. In the evening there are always a few parties and dinners to attend.  If it is a big show then you are more than likely to go back home with a bunch of T-Shirts, mints and pens that light up.

Aside from a few exceptions, most of the companies attending these trade shows never even get close to covering their expenses from the additional business they have generated from the show.

So why do they attend in the first place?  More often than not it is the principle of keeping up with the Jones. In other words, if the big names in the industry are all there and your competitors are all there so the adage is you have to be there.

Startups are the worst perpetrators.  The ones with some solid financial backing and suddenly increased marketing budgets make a point of attending as many trade shows as they possibly can.  You can tell which ones they are because these guys often have the best T-shirts and gadgets to give away!  But what does it get them in return?

These events can get expensive very quickly and as a startup or any company you have to look at the opportunity costs involved.  If it is costing $50,000 to be present at an event, then you have to automatically ask yourself where else could that money be better strategically invested in order to provide the best return possible? In looking at this I will concentrate on Business-to-Business trade shows.

As an example, here are the costs that I was dealing with while managing a trade show in Europe for a startup I was with:


  • Booth                           $12,294.00
  • Hospitality Suite            $11,741.00
  • Stand Decoration           $9,185.00
  • Rental Furniture               $825.00
  • Rental Hardware             $1,100.00
  • Shipping                          $1,100.00   


  • Hotel                          $3,300.00
  • Flights                         $1,650.00
  • Transport                      $550.00
  • Perdiem                      $1,650.00


  • Giveaways                 $2,200.00
  • Print                           $2,200.00
  • Advertisement            $1,375.00
  • Shirts                           $1,100.00

Total                          $50,270.00

Note: These figures did not include PR that was scheduled to occur during the event or the travel and expenses of other employees coming from other departments as they are normally considered different cost centers.

You can see that the figures could add up quickly and this is probably a conservative amount in comparison to what some companies spend.  I could even factor in the weeks of effort and employee time required to organize such an event, which would increase the amount considerably.

Having attended and managed quite a few of these I started to understand what was working and what wasn’t. This is what I found.

1. Choose the right targets

If you are going to attend a trade show or event then it should be because everyone in the industry that you are targeting are all going to be congregating at the same spot.  This alone should save the company time and money from traveling all over the country to see these people for a first meeting (assuming you can meet with them).

2. Fill up that agenda

Everyone attending, from management to sales people, should all have their meetings blocked and confirmed weeks before the event even starts. If you are attending the event in hopes of making contacts at the event then you are set up for failure.  The guys you are hoping to meet will most likely be all booked up before you even get there. If you are not able to fill your agenda up, then you should think seriously about whether or not your company should be present at all.

3. Set your goals

Everything that happens at the event should be tied to a goal.  If you have set up a meeting then know what you want to achieve from that meeting.  Don’t waste too much time before getting to the point and don’t block somebody in for 1 hour when you only need 30 minutes (If they even give you that much in return).

We were trying to meet with the Director of a large French company at an event in Cannes one year.  We got through to him well before the event but he told us he could only give us 10 minutes in the lobby of one of the busy large hotels where he would be between meetings. We said fine. It only took as 10 minutes to capture his attention and an invite to Paris where we were able to build a relationship.

4. Marketing and Branding

I am always amazed at how much some companies spend on branding at these events.  I also made the mistake of throwing away good money on bad investments such as buying ad space on huge banners at the events, or large ads in the Event newspapers.  These investments never brought anything.  Business to business trade shows are not selling to the mass markets so as a company you should not be marketing your brand as if you were Coke or Pepsi. Your products, services and the way you manage your relationships will be the way you brand yourself.

5. Use your booth wisely

I have seen so many booths with 2 guys sitting behind a counter waiting for attendees to come and discover their brilliance.  Quite often those stopping by are often other company participants asking, “Are you having a good show?”

Your reach at these shows is limited to the total attendance.  You are then limited to the number of people who walk by the stand. Then you are limited to the amount of people who stop by to inquire about your product.  You only have so much time so the number of people you can talk with on a booth is limited.

The greatest weakness to this kind of booth strategy is that you are not able to target the decision makers.  Quite honestly, I have had people come by, ask a few questions, then ask for a t-shirt or a pen that lights up (yes, I was guilty of giving out my share!).  In all honesty, looking back at all the shows I have attended, this type of activity never brought anything but sunk marketing costs.

The best way to use your booth goes back to the preparation before the event. Have your meetings booked solid and have all the marketing tools necessary to best present your products or services to them.

6. Evening events

Everyone likes to get out and have fun and relax after spending the day in meetings in a noisy conference hall.  There are always shows and parties organized at these things where attendees like to get together and hang out over a drink.  However, I have found that there are always these high-powered guys that just can’t turn off the sales pitch, and everyone ends up trying to avoid them.

There may be a bit of business talk that happens but often a much better strategy at these evenings is to just hang out and have fun.  If you run into someone that you had a meeting with earlier don’t keep trying to close the deal.  The best method is to develop more of a human relationship.  You can gain a lot of confidence from people just being yourself.

7. Leverage your investment

A smart strategy is to leverage your investment in these trade shows.  The biggest bang for the buck that we got when attending a large industry trade show was to time an important news event or product launch for the company at these events. Once again, most of the preparation came before the event.  We were in contact with most of the media attendees (who are always looking for a story), informing them that we were intending to launch a new important product.  This got us many “free” write ups in important industry publications and exposure at the trade show that was much cheaper than what we paid for our large banner with our company name!

In the end however, if you are not able to quantify your presence at these trade shows and have not idea what your ROI is then you probably should not be attending.  The money would be better spent building up your business one client at a time.