The best case study I have ever used with MBA students is the story of Levi’s suit business. It sounds too bizarre to be true, but it is all too real.
A young and extremely enthusiastic marketing manager called Steve Goldstein starts working on a new product innovation – Levi’s Tailored Classics – an off-the peg, low-priced suit that Levi’s plans to market to its existing customer base for jeans. When I used to introduce the idea of Levi’s making suits to the classroom, every MBA student would wince. And it gets worse as Goldstein works out his pricing, product design and ad campaign (a man in a suit with a horse).
Finally, the errant marketer runs some focus groups with his target segment and – sure enough – the response of the assembled customers is something akin to a war crimes tribunal or a really bad wake. Goldstein watches from behind the one-way glass as each customer tells him, in no uncertain terms, that they do not expect or want Levi’s to make them a suit.
As the focus group participants shuffle out of what was, probably, one of the longest hours of their lives, Goldstein turns to a colleague sitting next to him and says: “But once they see the suit, on a hanger, a little asterisk will go off in their head and they will think that Levi’s can also make a good suit too.” He leaves more determined than ever that his new product is a winner.
Not surprisingly, the case study sets up an animated discussion in class. How could he be this dumb? Why can’t he see the weakness of his strategy? Can he not hear the voice of the customer?
The perils of product-orientation
The answer to all of these questions can be found in one of marketing’s most achingly difficult challenges: market orientation. It turns out that, as marketers, we quickly start to lose the perspective of the market as we spend hundreds of days a year inside a company that is launching or managing a product.
We start to think the product is the centre of the world, not the customer that we are designing it for. We begin to assume the claims we make in the advertising are what the customer should care about. We start using dumb verbs like ‘convert’ and ‘educate’ to describe what we will do with our marketing rather than smarter ones like ‘listen’ and ‘serve’.
We go native, and the product cart starts to pull the customer horse. Even though there is a mountain of evidence and precedent that shows that the best way to make money is to find out what the customer is doing and wanting and then design products for them, we start making ‘innovative’ products in a vain attempt to change what they want and how they currently do things.
The official terminology is ‘product orientation’. As the great marketing guru Seth Godin puts it, we spend too much time finding customers for our products rather than doing it the other, more successful, way around.
I stopped teaching the Levi’s case study years ago. It remains awesome but it is set in the very early 1980s and, at some point, the width of the collars, the hairiness of the faces (everyone looks like a really dodgy porn star) and the complete absence of women made the whole thing inconceivably out of touch. But Levi’s suits came back to me in a flush as the whole Cambridge Analytica saga played out over the past month.
Just because we can do a much more advanced job of targeting does not mean consumers want any part of it. In fact, we can be certain that they do not.
Gradually, marketers are beginning to realise that, with the exception of some pretty ropey research recruitment and data breaches, this is not a scandal of wrongdoing but rather one of modern, legitimate marketing practice. Society might have woken up last month thinking there was a burglar in their house, but on running downstairs with a baseball bat they are now discovering it was just their new Alexa doing what they allowed her to do, even though they did not know they allowed her to do it.
This might all sound like good news for marketers. It isn’t. The real eruption of consumer anger taking place around Cambridge Analytica is not to do with how the company accessed data from Facebook but that a) such things are even possible, b) they are impacting how people are targeted by marketing and c) it apparently works.
Consumers have always had a paranoid fantasy that wildly overstates the capability and reach of marketers, but suddenly they are creeping closer together and people aren’t happy at the prospect.
The marketing corollary to all this has been to point out that consumers have nothing to worry about. More data means better segmentation. Better segmentation means a more accurate portrait of the consumer. That accuracy leads to much better targeting of messages, so you are reached at the right time and with the right products.
It also means the positioning of these products will zoom in on your specific needs far more effectively. This will lead you to discover better products when you need them and to generally live a more fruitful and satisfied life.
Basically, shut the fuck up and talk to the silver box next to your pot plant. Optimised groceries and a trombone are already en route. You’re welcome.
Consumers want privacy above ‘relevant’ ads
But like Goldstein a lifetime ago, we marketers are making an enormous error of product orientation. Just because we can do a much more advanced job of targeting, and just because it certainly makes marketing more successful, does not necessarily mean that consumers want any part of it. In fact, we can be certain that they do not.
The data could not be clearer. Last month, Reuters polled a representative sample of Americans and asked them if they wanted to see more targeted advertising. Only 9% (presumably those working in tech, marketing and sales) said they did. A massive 63% said they wanted to see less targeted advertising in the future.
As media guru Faris Yakob observed last week, we marketers are the only people on the planet that think the movie Minority Report was a positive vision of the future. You know the scene from Spielberg’s sci-fi classic, with Tom Cruise walking through a cacophony of digital outdoor ads that scan his retinas and send him repeated, targeted messages as he passes them? Everybody else thinks this is a dystopian vision of a future-hell gone wrong.
I’ve been to at least half a dozen conferences and business school classes where that clip is played as an example of how the marketing future will look and how wonderful it’s going to be. Marketers see the future very differently from the market and that disjuncture, hidden away for 15 years, is suddenly becoming a problem.
In the UK, the analysis of the issue is even clearer thanks to the efforts of Tini Sevak and her team at YouGov. Sevak presented her research recently at Marketing Week Live and her findings reveal a similar proportion of British adults, 55%, hate the idea of personalised, targeted advertising. But YouGov has gone one step further than Reuters and, like proper marketers, segmented the British adult population using two variables: the degree to which people believe ads help them buy products and their acceptance of targeted advertising in principle.
The results of YouGov’s efforts should be printed out and put up in every ad agency and marketing department in the UK. They offer all of us a salutary perspective that the market – the people who we are meant to listen to and design for – has a very different mindset to marketers. Well, one segment doesn’t: ‘Personalised Pioneers’, who represent around a quarter of the UK population, like ads and want to engage with personally targeted ads.
But for the other three quarters of the population there are various degrees of suspicion and rejection towards the premise of targeted advertising. The only reason we have not heard more from this large, dominant slice of the British population is that they had no idea what was going on until three weeks ago.
Now that the dirty personalised rabbit has been pulled from technological top hat, the push-back – especially from segments like ‘Shout and Let it All Out’ and ‘That Don’t Impress Me Much’, which make up half the population – will be significant and enduring. Especially when that push-back is being supported and catalysed by a ‘traditional’ media base intent on survival, and suddenly sensing a weak spot in their previously insurmountable digital rivals.
How marketers respond to all of this is, quite literally, the biggest question our discipline has faced in decades. Up until about three weeks ago, the fervent hope of ad tech was that no-one was going to notice. There was a genuine belief that the whole targeted advertising revolution could take place in boardrooms with absolutely no awareness across the households of the developed world that anything had changed.
Hey, Ms Consumer, you get email, search, maps, friendship interaction and voice-controlled homes for free! How good is that? Just don’t look at the pipe at the back of your house pumping terabytes of data back to northern California; it’s irrelevant. Look, your voice activated device can open your curtains. Woo!
That era of ignorance is clearly over. Thanks to a posh bloke from Eton in a (terrific) suit and some ropey academics with an app that can predict your personality, most consumers now glimpse what has been going on and have suddenly noticed the big silver pipe running from the back of their house, down the back yard and off to Menlo Park, California.
A crucial fork in the road
If the ad tech warriors win the argument ahead of us, this sudden awareness is not going to be a major obstacle to the future. They will continue to ignore the wishes of the market and convey the idea that customers don’t understand what is good for them.
Like Steve Goldstein selling Levi’s suits to men who want a pair of jeans, they will push on with the idea that, once consumers see just how wonderful their new targeted ads can be, they will quickly fall in line and become believers. The usual dumb verbs like ‘educate’, ‘explain’ and ‘convert’ will spring up once again and marketers will bang their collective heads against the rock of the market in an ever more antagonistic relationship.
Eventually, even product-oriented marketers do get the message. In the Levi’s case study, Steve Goldstein fails miserably with his Tailored Classics products, learns his lesson the hard way and launches a brand called Dockers, which you might have heard of and which earned Levi’s billions. The key success point for Dockers was – no surprise – give customers what they want rather than what you think they need.
The smarter, more advanced position is to skip the long and painful learning ahead, follow YouGov’s lead and, ironically, use segmentation and targeting to market segmentation and targeting. There are customers, a significant number, who are prepared to trade their information for free services and, ultimately, targeted ads that will help them make smart choices. And there are others that might one day come to see the trade-off as also worthwhile rather than creepy.
Instead of the nefarious terms and conditions with all the hidden loopholes that sucker everyone into the deal, why not bring all this out into the open, explain to consumers what is going on and ask them to agree to it? Not all of them will comply, but you will have switched on all the lights and done things in a market-oriented way.
That was the viewpoint of one digital entrepreneur who we have not heard much from recently. Eight years ago, weakened from cancer but still spitting bullets about consumer sovereignty, Steve Jobs laid out Apple’s future position long before that future had begun.
At the D8 Conference in 2010 he explained: “Privacy means people know what they are signing up for… I believe people are smart and some people want to share more data than other people do. Ask them. Ask them every time. Make them tell you to stop asking them if they get tired of you asking them. Let them know exactly what you are going to do with their data. That’s what we believe.”
It’s still what Apple believes. In an interview with MSNBC to be broadcast later this week, current Apple chief executive Tim Cook is critical of the current evolution of “creepy” targeted ads. Asked what he would do if Apple found itself in a similar position to Facebook his reply is as curt as it is significant: “I would not be in this situation.”
Cook, like his predecessor, believes the future of marketing does not require a personalised data mountain. “We’ve never believed that these detailed profiles of people, that have incredibly deep personal information that is patched together from several sources, should exist.”
That is an easy thing for Apple to say and an impossible one for Facebook or Google to agree with. Apple has built a strategy around charging for hardware and software and doing so with premium prices. Both Google and Facebook have chosen a different strategic path in which almost all of their offerings are universally available for free to consumers in (a so far unspoken) exchange for their data. This means they cannot walk back on their data-for-services philosophy and they cannot target a smaller sub-section of the population, because their success depends almost as much on universal scale and reach as it does getting the data in the first place.
So, we reach a fork in the marketing road. Will consumers accept the silent bargain of personal tech in exchange for personal data? Or will they opt for organisations that protect their privacy and charge them for the privilege? Or will one segment opt to trade their data, and another prefer to pay? I have no idea what the answer will turn out to be but the future of marketing and the longevity of most of the biggest brands on the planet is now tied up to the eventual outcome.
Professor Mark Ritson will be teaching the next Marketing Week Mini MBA course from 24 April 2018. To book your place, sign up here.