Studying the winning formula
Market research may not be an area which you would normally associate with innovation, but innovation and achievement there is. And the Market Research Society (MRS) Awards recognise individuals who make a distinguished contribution to market research, devising new methodologies and ways of thinking – awarding “individuals who are prepared to share their views, knowledge and understanding for the benefit of their fellow professionals”. This year’s awards were held this week (November 12) in London.
There are nine MRS awards for achievement and excellence in the industry, and this year a paper by Flemming from Thygesen of Levi Strauss Europe and Added Value’s Paul McGowan swept the board, winning three of them – the Applications of Research Award, Best Paper and Best Presented Paper. From Thygesen and McGowan’s joint paper – Inspiring the organisation to act: A business in denial – focused on rebuilding the role of market research, and the part it played in turning around the fortunes of Levi Strauss.
The paper is a frank look at the rise, fall and rise again of the brand, and how forming close relationships with your research agency is key to long-term success.
Eighties’ excess
From the early Eighties, Levi Strauss had enjoyed unprecedented growth – year-on-year, double digit growth had become “accepted as a natural state of affairs” claims the paper. The company focused on internal supply chain issues and the 501 brand; consumer insight was the exclusive domain of designers and Levi Strauss forgot about its other lines – and its consumers.
By the mid-Nineties, the role of market research had become that of a principal cheerleader: its results were positive, but limited. Levi Strauss’s market share went up, equity improved, and in focus g
roups consumers always spoke in glowing terms about the brand – all seemed good. But, inadvertently a platform had been created where it was difficult to criticise the brand.
Small research agencies had been pushed out, providing only so-called passive information, focusing on the research process rather than customer views. The company had no research on either product or retail, two areas that would prove to be a weakness when the market for 501 jeans dropped dramatically.
By the end of 1997 the market was in free fall, sales of Levi jeans had dropped by six per cent compared to the previous year. Consumers were drifting away and turning to other clothes to set new trends, such as combats and casual trousers, and more importantly to other brands.
On the verge of a crisis, the company pulled together the various strands of research to analyse the consumer, market and brand situation across Europe. What it found was that consumers had distanced themselves from Levi Strauss. By 1998 an internal team began working in partnership with Added Value to deliver a new brand vision.
The partnership concentrated on five things: looking at what market Levi’s competed in; who its core consumer targets were; what consumers’ key needs were; what defined the enduring distinction of the Levi’s brand; and which product line would most effectively deliver the brand.
Levi’s market share was in jeopardy, its brand equity, sales volume and profits were falling away – consumption was to fall 50 per cent between 1997 and 2000. In short, consumers had turned their backs on jeans.
No more jean genius
When the team looked at brand positioning, its core problem was that because the 501 product and the Original jeans campaign had turned the business into a profit machine, any attempt to move it away from the proven formula was met with mistrust. However, Levi’s meant blue jeans and these were no longer fashionable, and the challenge was to make them cool again.
The first step was to introduce a “youth panel” developed by Levi Strauss and Added Value. This panel is now to be found in the most important European fashion cities, including Milan and Paris, and meets twice a year when new lines are discussed.
Working with a team of young designers and Levi’s marketing team, Brand Vision came up with the idea of blending denim with other fabrics. By May 1998, prototype products of Red and Levi’s Engineered Jeans were available for testing. The team also looked at the use of denim for creating new “non-trouser” products.
The Brand Vision team also developed retail innovation. It took direction from the way fresh fruit and fish are displayed for consumers. Jeans had been displayed in stacks which were hard to see and uninviting to touch so the stores were transformed with a flexible wall system of canvasses upon which the products would hang.
The result of this teamwork between Levi Strauss and Added Value is threefold. Where the brand programme has been implemented a business which was in free-fall has succeeded in reversing the decline. Revenue is now back under control and the company is seeing signs of equity improvements after four years of continuous decline.
While this entry acknowledged that success has many parents, research played a key role. It raised the alarm that the business needed a shake-up and did not stop shouting until the business listened and made constructive changes.
The marketing research relaunch debate has raged for the past decade and there has been no shortage of suggestions on how this can be done. Virginia Valentine, who picked up two awards for her paper, tackled the case for a new market research language model.
Valentine’s paper focused on the discourse of market research – the language and imagery the industry uses to communicate what it is, what it does, and how it might contribute to the modern world of strategic planning.
Mind your language
In her paper, Valentine set out to change the assumptions that a researcher is a backroom technician rather than a strategic thinker and an active boardroom participant. But she acknowledges that this will not happen until the industry breaks its codes, changes its discourse and ditches its current language.
Valentine also acknowledges that because market research has such a diverse offering, it makes it hard to unite the industry under one umbrella image. However, she addresses this difficulty of achieving an umbrella image by looking to the example of supermarket retailers.
“The Tesco shopper uses household cleaning products in an entirely different way from fine wines;” she says. “Organics serve a different purpose to CDs, yet they are all marketed within the framework of the Tesco brand values.” She argues that all researchers can learn from this model.
Polar opposites
She says that market research is “a world of polar opposites”. On the one hand it deals with hard facts and statistics, while on the other it attempts to quantify customer feelings, desires and experiences. Valentine argues that by developing a new language model within the industry, market research could reinvent itself and juxtapose these two core elements.
Her paper, which earned her the David Winton Award for best technical paper, and the Best New Thinking Award, calls on the industry to redefine its aims and its methodology.
So, once again market research proves itself to be more than merely face-to-face interviews and question and answer sessions. The market research industry is looking to new methodologies, new ways of asserting itself within the marketing mix. And brand owners are once again looking to market research to learn how to value their customers brand experience.
The winners
Silver Medal – Fred Langerak, Department of Marketing Management, Erasmus University Rotterdam
The relationship between customer and supplier perceptions of the manufacturer’s market orientation and its business performance
The David Winton Award (The Best Technical Paper)- Virginia Valentine, Semiotic Solutions
Getting the message across: a semiotic analysis of the MR discourse
ISBA Award (Advertising Case History) – Ian Brace and Louise Edwards, NFO BJM and Clive Nancarrow, Bristol Business School, UWE
I hear you knocking…can advertising reach everybody in the target audience?
The Applications of Research Award (Research Effectiveness Case History) – Flemming from Thygesen, Levi Strauss Europe and Paul McGowan, Added Value
Inspiring the organisation to act: A business in denial
Best Paper Award – Flemming from Thygesen, Levi Strauss Europe and Paul McGowan, Added Value
Inspiring the organisation to act: A business in denial
Best Presented Paper Award – Flemming from Thygesen, Levi Strauss Europe and Paul McGowan, Added Value
Inspiring the organisation to act: A business in denial
Best New Thinking Award – Virginia Valentine, Semiotic Solutions
Repositioning market research: A new MR language
Best Newcomers Award – Penny Harwood and Caroline Davey, Opinion Leader Research
Citizenship outside the classroom
The Chairman’s Awards – Rachel Lawes, Define Research & Marketing
Demystifying semiotics: Some key questions answered
DOCB:
SRCE: Marketing Week
PDAT: 141102
SCTN: Special Report
PGNO: 47
RANK:
HDLN: Direct dynamism
SBHD: Despite shrinking marketing budgets, client expenditure on direct marketing has increased by ten per cent since last year. David Reed takes a look at the industry’s movers and shakers
BYLN:
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These are strange times for direct marketing agencies. According to the Direct Marketing Association (DMA) Census for 2001, client expenditure on direct marketing (DM) increased by ten per cent. This goes against the general downward trend of marketing budgets and proves yet again that the discipline tends to be counter-cyclical.
However, DM agencies were faced with budget cuts, a lack of new business and widespread reductions in staff. This year’s Marketing Week Direct Marketing Agencies Reputation Survey – carried out in conjunction with the DMA – shows more dynamism as a result of closures and mergers than from improved agency performance.
This gap can be explained partially by a rise in the number of clients working directly with DM suppliers, combined with greater spending through specialist direct response media buyers. Agencies whose reputations have improved are those that are good at managing the entire DM supply chain and providing strategic advice, instead of focusing on individual campaigns.
OgilvyOne Worldwide London’s rise to the top of the table is in many respects a result of its hard work in navigating the choppy waters it has faced over the past few years. The agency retains scale and is used by, or is known to, 24 per cent of respondents.
OgilvyOne chairman Paul O’Donnell is honest about the realities of the market. He says: “It has been an extremely tough couple of years – we are still waiting for things to improve.”
Saving face
Reputations are difficult to maintain when agencies have to lose staff. O’Donnell notes that “there are severe difficulties in terms of staff remuneration”. Choosing which people to let go is no easy task, especially when clients place a lot of importance on having senior directors working on their account.
O’Donnell adds: “Clients don’t want too many managers, they want good senior people in their office leading their teams.”
At OgilvyOne, a strong senior management team has been retained and, of these, three or four are the equal of agency bosses elsewhere.
Clients rate creative ability and strategic planning very highly, with 83 and 82 per cent respectively, saying that these are very important. Expertise across disciplines was very important to 69 per cent. However, despite this, the top 20 agencies in this year’s survey are more strongly DM-oriented than in previous years.
While there are significant changes in position on the tables, the effects of restructuring have been most noticeable. Three agency closures, two mergers and numerous renamings have all affected awareness and reputation among clients.
The biggest merger – of Brann Worldwide and ehs:realtime – had yet to happen at the time of the survey. An indicator of the difficulties ehs:realtime has faced fo
llowing the merger can be seen in its fall from seventh to 13th place. But consolidation and repositioning does not have to be negative.
Proximity London sits in second place, having been last year’s top agency. This is a good result for the agency, considering that it has had a two-stage renaming from its former title of Barraclough Hall Woolston Gray. The decision to bring together multiple business units into a single set-up with a wider focus is sustaining its market position. The agency is also the best known, with 35 per cent of respondents having heard of it or used it.
Restructured reputations
Demergers also appear to pay off. Communicator Marketing Worldwide is an obvious example at fourth place. Launched in February, and with just 14 staff, it only handles six clients, although these do include Jack Daniels and Colgate.
For managing director Paul Seligman, the reputation score is a validation of his agency’s “reincarnation”. Known as Communicator two years ago, it merged with Bates Communications, which subsequently became Blue Skies 141 and then 141.
However, Seligman left and with 141’s blessing – and some of Cordiant’s cash – set up the re-born Communicator. Its name – already familiar with clients – has been one of the driving forces behind its success. But Seligman’s departure has hit 141, as it has fallen eight places to 19th in this year’s survey.
“We even have a Buddha as our logo,” says Seligman. He adds: “There are a lot of agencies out there, but not many good ones.”
He believes that a smaller agency, like Communicator, can have more flexibility and offer that crucial senior director involvement on accounts. According to Seligman, the downside of being small is that, “there is a problem getting to see the right client at the right level”. Big clients often prefer to align with big agencies, whatever their day-to-day experience of account handling may be.
Communicator is also unusual in that it carries out psychometric and aptitude testing on all new recruits. This has helped to create a distinctive culture, with the result that the agency tends to win business from clients who are “drivers”. Seligman says: “They are people who are all about results – they don’t care how it is done. If you tell them you can do it and you do, they are happy.”
A disadvantage of this is that many DM clients are “analysts”, who get obsessed about the small print and the process itself. These clients are typically the ones who pick big agencies. Even so, the performance of Communicator in this year’s survey is bound to set its bigger rivals thinking about how to improve their own offering.
Despite the general preference for size, individuals can still have a big impact on DM. The arrival of Mark Fiddes as creative partner at KLP Euro RSCG two years ago has helped it to jump from 18th to eighth place in the survey. The agency topped the Promotional Marketing Reputations Survey as well; suggesting it is putting together a genuinely integrated proposition.
Fiddes says: “We’ve won a number of awards that have stretched between disciplines. I have always been a believer that promotional strategy lends itself to broader relationships. It is only over the past two years that the agency has been able to demonstrate how that works in direct mail and interactive campaigns.”
Over the past 18 months, the agency has grown an astonishing 300 per cent, driven by increased activity from clients such as Diageo and Cap Gemini. Fiddes believes that a growing number of clients are using a single marketing services agency for all their activities.
He adds: “Increasingly, they are using the same agency, whether they started off with promotional marketing or DM. It is one of those changes that makes things more straightforward, rather than saying to one agency, ‘that’s a good idea, but stop there because I have to go and talk to another agency about doing it as a mailpack’.”
Among the clients surveyed, 79 per cent also use their DM agency for loyalty programmes; 67 per cent for media buying; 61 per cent for sales promotion; 46 per cent each for customer relationship management and strategic consultancy; and 39 per cent for interactive marketing. Through market forces, the full-service agency is being created once again.
Tequila London has responded to this move, and as a result jumped to ninth place from 16th last year. Tequila London chief executive Paul Biggins says: “We have structured the business to focus on marketing solutions and media neutrality. We have been bringing teams together to focus on client requirements.”
The agency has grown by 30 per cent this year and has focused on areas where it can add value to its clients. Customer insight is a major aspect of this, with a strengthened strategic and data-planning unit. Biggins adds: “We have put a lot of investment into expanding our data team and analysts.”
Tequila has also been scooping awards for its work, winning more than any other agency at the Precision Marketing Response Awards this year. It has recruited more senior staff to provide greater client-facing emphasis. “We talk to very senior people in client organisations, so we have to have high-calibre people in the agency,” says Biggins.
The other agency making big strides in the survey is TBWA/GGT Direct, which rose from 19th place to 11th. Strategic and data planning has been a “Trojan horse” for the agency. Chief executive Mike Cornwell says: “We have a good reputation because our planning department is large, highly skilled and has experienced people.” Three of the agency’s ten board directors are planners, a higher proportion than in most agencies.
Some major account wins, such as Eagle Star and 3 (formerly H3G), have helped its visibility. But it is client retention that has helped to build its reputation more than anything else. TBWA/GGT Direct’s biggest clients – NatWest and Vauxhall – have been in place for four and 12 years respectively. More recent arrivals, such as Prudential, have been increasing their spending through the agency.
In this difficult climate for DM agencies, building on what you have rather than pitching for new business is critical. Clients are more impressed now by the service they receive than by their share of voice in the press. With 58 per cent of clients saying that their DM agency will play an increased role in the next 12 months, keeping the house in order is better bet than building a new wing.
