MARCH 2005
MARKETING AT C-LEVEL
SCOTT DAVIS
YANKELOVICH
McGRATH & MacMILLAN
MARKETING:
TECHNOLOGY
CAN HELP!
RE-FOCUSING
THE POWER OF
ON CONSUMER CONSUMPTION
ATTITUDES
CHAIN ANALYSIS
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HOW A HIPPY-DIPPY ICE-CREAM MAKER
FINDS A WARM SPOT IN THE HEART OF
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MARCH
2005
FEATURES
6
MarketBusters
By Rita Gunther
McGrath and
Ian C. MacMillan
FROM THE EDITOR
There are some quiet perks that go with having your name on the
editor’s door. For one, there’s the chance to go back-and-forth with our
readers as we continue to shape this start-up into a publication that
senior managers and strategists find indispensable. (Keep those
electronic cards and letters coming in to point@adage.com). For two,
there’s the opportunity to guide what goes into each issue. Helping
determine what goes on the cover that helps you make a “readme/don’t-read-me” when you spot Point in your in-box.
If life were so simple that I had been handed Left-Handed-Baseball
Geoffrey Precourt
Fan magazine as a way to earn my living, contents selection would be
easy: I’d keep a reasonable accounting of what went on in my life and
put the diary to paper. But trust me: You don’t care what goes on in my life. What happens in any
randomly selected business day in your life is far more compelling. And that’s where Point begins:
Identifying the smartest thinkers and the best strategies that are the underpinnings of the most
successful 21st century marketing programs.
In recent months, we’ve spent time with Dawn Hudson, the CEO of Pepsi North America who
came up through the marketing ranks; Phil Guyardo, the Kmart CMO whose job became more
challenging the moment the ink dried on the Sears merger announcement; and Jim Stengel, the
global marketing officer for Procter & Gamble who sets the global agenda for every marketer.
Our cover story this month, Walt Freese, the CEO of Ben & Jerry’s, is slightly counterintuitive.
What makes Freese—and B&J’s—particularly interesting is the presence of a parent company
whose management DNA seems fully the opposite of the brand’s legacy. How does Freese balance
the demands of his European parent with the needs of his counter-culture loyalists? It’s a tough
question for Walt Freese, as he seeks to align his marketing mission with parent Unilever. It’s great
reading in this issue and a story that promises remain intriguing as B&J’s European parent realigns
its strategic priorities. And, as the editor, it’s a perfect fit not just for Point, but my other fantasy
magazine: Left-Handed Ice-Cream Fanatic.
POINT MAGAZINE
Watch the steps in your
customer’s consumption
chair to make powerful
new connections to
target audiences
12
It Only
Looks Easy
By Sarah Mahoney
The fundamentals of
Ben & Jerry’s ice-cream
marketing—with a touch
of Unilever flavoring
19
Welcome to
Concurrence
By J. Walker Smith,
Ann Clurman
and Craig Wood
At Yankelovich Partners,
a new marketing model
starts with addressable
attitudes and leads to
concurrence
Editor in chief: Rance Crain; VP-publishing/editorial director: David S. Klein; VP-publisher: Jill Manee
EDITORIAL
Editorial Director: Scott Donaton; Executive Editor: Jonah Bloom
Editor: Geoffrey Precourt; Design: Jesper Goransson
Contributors: Brooke Capps, Ann Clurman, Scott Davis, Thom Forbes, John Galvin, Rita Gunther McGrath, Sarah Mahoney, Gail McGovern,
Ian C. MacMillan, John A. Quelch, Randall Rothenberg, J.Walker Smith, Craig Wood
DEPARTMENTS
2
5
ADVERTISING/CIRCULATION
CMO AGENDA
By Scott Davis
Art director: Donna M. Lappetito; Photo/art editor: Susan McCoy; Production editor: Lisa Fain; Copy editors: Sheila Dougherty, Ken Wheaton
General manager, sales and marketing: Vanessa Reed
General manager, online: Allison Price Arden; Circulation director: Philip Scarano III; Subscriber services: 888-288-5900
POINTERS
24
ENDPOINT
BOARD OF ADVISERS
Michael Boylson, chief marketing officer, J.C. Penney Co.; Ian Beavis; John Costello, exec VP-marketing and merchandising, and chief marketing officer, Home Depot;
Paul Guyardo, senior VP-chief marketing officer, Kmart; Allison Johnson, senior VP-corporate marketing, Hewlett-Packard Co.; Jim McDowell, VP-marketing, BMW of
North America; James D. Speros, chief marketing officer, U.S., Ernst & Young; Joseph V. Tripodi, chief marketing officer, Allstate Insurance Corp.
Cover photo by Darryl Estrine
POINT MARCH 2005
1
THOUGHT, TALK & SPECULATION
CoreBrand
Value Index
The latest CoreBrand
Equity IndexTM is 1.09,
up 0.01 from last month.
The Index measures the equity value
of a portfolio of 10 blue-chip corporate
brands to track trends in corporate
brand value. Index value of 1.00 based
on Aug. 2, 2004 portfolio value.
Sector Report:
Technology
Performance of top
10 valued brands in the
Technology sector.
(Scale is $1 million
in brand equity.)
GHOSN’S GLOBAL PERSPECTIVE:
FIVE CONTINENTS... AND COUNTING
The story is familiar: The French
company buys the Japanese car
manufacturer and hangs a brandturnaround assignment on the
Lebanese CEO who was raised in
Brazil and schooled in France.
Indeed, it would be difficult to
imagine a venture more
intrinsically global than Carlos Ghosn’s ascension to
senior management in Renault’s Nissan acquisition.
It’s also a story that’s been reported to death. So
why would you want to read “Shift: Inside Nissan’s
Historic Revival” (by Carlos Ghosn and Philippe
Ries, Currency/Doubleday, 2005)? For one very
good reason: Ghosn’s multicultural perspective,
which helps him understand that one brand
mandates different kinds of positioning in
different kinds of marketing environments.
STEWART’S MICKEY-MOUSE QUERY:
ANY LEADERS LEFT IN THE CLUB?
James B. Stewart, it would seem, had happened
upon a soft-ball business-rescue story: A venerable
brand falls into chaos. Revenue drops to $1.3
billion. New management takes over. Twenty
years later, revenue reaches $30 billion. Quick. Do
the match. That’s right: A 23-fold turnaround.
But this is no magic kingdom. As Stewart tells
the tale in “Disney War”(Simon & Schuster, 2005),
it was—if you’ll pardon the expression—a
management rat’s nest. And it’s in the
storytelling—the provocatively entertaining
presentation of a hard-nose business story—that
distinguishes his report from just about any other
‘‘
Source: CoreBrand
2
MARCH 2005 POINT
“We launch an advertising campaign in the
United States,” Ghosn writes, “[and] it’s a single
campaign for a market of 16 million vehicles.
When you talk to your dealers, you speak in one
voice. … A German doesn’t buy the way a French
person does, or an Italian or a Spaniard.
Commercials and advertising campaigns are
different; marketing is fragmented. There’s a
relative inefficiency in the makeup of the
European market. It will take years to reach the
American market’s level of efficiency.”
But the vision for doesn’t necessarily include any
of these markets: “[One] major challenge the
automobile industry faces in the 21st century is the
globalization of the car industry beyond Europe,
North America and Japan. … It is the great
emerging countries—Turkey, India, Brazil, and, of
course, China—that represent the ‘new frontier.’ ”
What’s critical is that you
have strong focus [on core
businesses]. The marketplace is
more dynamic.”
—Kenneth I. Chenault, president/ceo,
American Express co., in explaining to The
New York Times his company’s decision to
spin off its financial-advisory business.
business book since, well, Stewart
put pen to paper with “Den of
Thieves” in 1991.
So, you don’t about the business
of Hollywood. What’s in “Disney
War” for you? Ever had a boss who
had a knack for bringing in great
talent but was threatened by his
hires? Read Stewart. Ever work with someone so
enthralled with the trappings of power that he took
his eye off the ball? Read Stewart. Ever pick up a
Kitty Kelley book and lose yourself flipping back and
forth from the index? You’re gonna love Stewart.
If it is… does turn out to be a hoax, etc., then
I guess it is sort of a complimentary that
people are mistaking it for an actual person.”
—Liam Cusack, marketing co-ordinator for
Dragon City, of Industry, Ca-based Models USA,
commenting on Comedy Central’s “The Daily Show”
on report that company’s action-figure doll had been
used as a model in Iraqi hostage threat.
‘‘
Q&A
STEVE RIVKIN
Market consolidation happens for all sorts of good reasons—supply-line efficiencies, cross-company
cost-sharing and more economical distribution systems—that ultimately benefit both the shareholder
and the end consumer. But when two cultures merge, some tough decisions mean that managers must
consider more than P/E ratios and market values. And one of those decisions is the intrinsic value of a
name. In “The Making of a Name” (Oxford University Press, 2005), Steve Rivkin and Fraser Sutherland
explore the value of what a company calls itself. And, in this time of SBC/AT&T and P&G/Gillette,
there’s no better moment to put the theories behind name-giving into practice.
SCOTT GRIES
Steve Rivkin (right) is the
co-author of five books on
marketing and communications
strategy. His consultancy is
responsible for, among others,
the names Ceridian, Global
Impact, Oceana, Premio,
Second Nature and Trueste.
Fraser Sutherland, a journalist
and the author of 11 books,
has been involved in major
dictionary projects in three
countries.
NAME
GAME:
PROZAC
“One of the most successful drugs in recent
decades has been the
antidepressant fluoxetine,
much better known as
Prozac. The name has
nothing to do with the
drug’s chemical makeup
or how it is used. It has
other things going for it.
It begins with the positive
associations of pro- and,
just as importantly, with a
punchy plosive. Having
built up force, it links to z,
evoking speed (except
for ‘zzzz,’ of course,
though that, too, may be
an element in the drug’s
SBC or AT&T. And why?
Easy: AT&T. Because, like GE or RCA, the AT&T name is so much more than a simple set of initials.
AT&T is the name that invented an entire category. It’s a name that changed the business landscape.
What’s an SBC? It was once known as Southwestern Bell, one of the seven original “Baby Bells.” But it’s
just another set of mumbo-jumbo initials. Yes, I know—SBC is a Fortune 500 company. But so are AES
and CMS and TJX and TXU. I defy you to tell them apart.
How does King Gillette fit in the house of Messrs Procter and Gamble?
The name Gillette fits as smoothly as a close shave. Here you have two companies that extol research,
innovation, marketing—and names. P&G has always put their brand names front and center, and now
they are acquiring one helluva famous name—like them, another pioneer in consumer products.
Gillette has held the No. 1 market share in wet shaving as long as anybody can remember. So what
should P&G do with the Gillette name? Venerate it, cradle it, and say it loud and proud. You throw away
that robust brand name and you’re guilty of moniker murder in the first degree.
What’s the worst name ever given to a product?
It’s a tie between Incubus (from Reebok) and Zyklon (from British shoemaker Umbro). Incubus was a
running shoe for women. The dictionary says incubus is “an evil spirit believed to descend upon and
have sex with women while they sleep.” Zyklon was the name of the poison gas used by Nazis in
extermination camps in World War II. Both companies apologized profusely for tripping over their own
laces. And then yanked the offending shoes.
success) and pops out
another plosive, k, at the
end. The drug plainly
sounds as if it would
work.”
—“The Making of a
Name,” by Steve Rivkin
and Fraser Sutherland,
Oxford University Press,
2005.
Has a new name ever given an old product new life?
Absolutely. The name Harlem Savings Bank of New York limited its expansion plans. A new name,
Apple Bank, severed the narrow geographic link and set up friendly associations with New York’s “Big
Apple” nickname. Apple Bank opened 4,950 new accounts the first month after the name change—triple
the normal rate.
Contact:
rivko@aol.com
POINT MARCH 2005
3
POINTTAKEN
FORTUNE’S LOOMIS:
BEATS HP BOARD TO
THE CARLY PUNCH
In Plain English, Why Fiorina Failed
FORTUNE—When Carol Loomis walks down
the corridor on the 15th floor of the Time &
Life Building, you almost can hear the
whispers: “There goes the best there ever was.”
As Ted Williams was to hitting, so is Carol
Loomis to business reporting. She’s been at her
post at Fortune for more than 40 years. And
whenever her name appears atop a major
story—as it did in the Feb. 7 cover piece, “Why Carly’s Big
Bet Is Failing”—the corridor talk begins anew.
Cover dates are deceptive. The Feb. 7 issue arrived on
newsstands a full two weeks before the HewlettPackard board assembled to suggest that
Carleton S. Fiorina take a walk. For
anyone who was curious why the end
had come, they only needed to
refer back to the gospel
according to Loomis:
“In the way that mergers
work—and this is the
true, if seldom
recognized, crime of the
deal—HP’s issuance of
roughly 1.1 billion shares
to Compaq’s shareholders,
to be added to HP’s
existing 1.9 billion, means
that HP sold about 37% of
its assets to the Compaq
crowd. Among those assets is
that gem of a printer business,
whose 40% market share
(according to IDC) makes it
one of the great franchises in
the world. To sum up the
damaging mathematics: In the
beginning, the old HP
shareholders owned 100% of
the printer business. After the
merger, they owned only 63%.”
fortune.com/fortune/ceo/articles
BLACK AND WHITE...
... And Read All Over? Who’s Kidding Who?
ROMENESKO—“Nothing changes at a
newspaper until it has to change.” Tony
DePaul, a 25-year newspaper veteran,
leveled that charge in a compelling letter
that set off a debate when posted on
PoynterOnline’s popular media site.
Too often, says DePaul, who swears he
has no “illusions about the good old days
that never were,” the packaging of news is
given more weight than the quality of the
content. And reader service is secondary
to filling space.
Saving the medium requires true innovation and investment
in core strengths, he says, a point that could resonate not only
with newspaper publishers but any old-media executive. Too
often, corporate cultures reward those who don’t rock the boat.
“Publishers and editors talk about reinventing newspapers, but
nobody gets into the upper ranks of these creaky institutions by
taking risks. It’s safer for bosses to just manage a slow decline instead
of risking a steep one by trying anything remotely akin to bold.”
Until that changes, DePaul writes, “what will pass for smart
management is leaving reporting jobs vacant.”
poynter.org/forum/view_post.asp?id=8769
One Magazine, Two Generations of Genius in Print
NEW YORKER—We’ve discovered all sorts of ways to get information in
front of people, but the printed word is still the gold standard. If you’ve
ever had any doubt of the power, efficacy and vitality of the written word,
settle down with “Andy,” a New Yorker visit with one of its own kind, the
late essayist E.B. White. The whimsical elegance of his writing—and his
life—is captured by Roger Angell, for years the magazine’s fiction editor
and Andy White’s stepson.
newyorker.com/fact/content/?050214fa_fact
The Blonde in the Striped Outfit? That’s Martha
NEW YORK MAGAZINE—The “Two Blondes” of New York magazine’s
cover story are Martha Stewart and Susan Lyne, the “stunt double” who
left as president of ABC Entertainment a year ago and now is
president-CEO of Martha Stewart Living Omnimedia. Among Lyne’s
credentials: “She has good manners and probably good penmanship,
too—both antiquated and underrated characteristics.” The latest on
Stewart: Her friends want to load up a new coming-out-of-prison iPod
with Dylan tunes.
newyorkmetro.com/nymetro/news/bizfinance/biz/features/10974/index.html
YOSHIKO KUSANO
4
MARCH 2005 POINT
BY SCOTT DAVIS
A MARRIAGE OVERDUE:
MARKETING MEETS TECHNOLOGY
value of core customers. One program under way
will allow Harrah’s to send messages with offers to
customers at the slots, based on historical and realtime information.
By better employing technology to understand
customers needs and wants, marketers can guide
product development and product offers more
effectively. In fact, the management at 7-Eleven
determined that the U.S. chain’s best way out of
bankruptcy was an intricate information network
to guide store managers in tailoring inventory to
match up with customer tastes. With a brand now
positioned more against Starbucks than Citgo, 7Eleven has experienced 32 consecutive quarters of
revenue growth.
And consider the second coming of “mass
customization.” Its actualization
by marketers would not have been
possible without the vision of
technologists on the ways to
stretch the Web’s capabilities.
Today, 80% of the Mini Cooper’s
customers design their own
vehicles online. But, as
Stamps.com found, with
pranksters slipping photos of
controversial figures through its
customized postage-stamp
service, it takes a unified effort by
marketing and IT to monitor and
control the system to ensure
brand integrity is upheld.
IT can also provide assistance on the
mechanisms by which marketing proves itself out:
better metrics programs. By helping create the
systems to track metrics such as purchase cycle
time, customer loyalty and referrals, IT can help
marketing demonstrate to management how its
programs are driving bottom-line results.
Technology is far more than an enabler for
marketing. It’s a weapon and a key differentiator.
But for it to be successfully deployed as such, the
interaction between the two organizations must
shift to a far more strategic level. CMOs who can
forge such partnerships will prove their value in
transforming their brands, their businesses and
themselves. ■
‘‘
Marketing and IT
need to bridge
operational gaps
to create a less
executional and
more strategic
partnership.
’’
TOBY MORISON
If knowledge is power, then senior marketers may
be missing out on a golden opportunity to expand
their bases on both fronts if they are not effectively
partnering with their counterparts in IT.
Only one in three marketers make claim to a
strong relationship with IT, says a study by
Forrester Research. The excuses are myriad: the
“Mars-Venus” misalignment (they focus on
different financial goals); the “Ain’t Got No
Rhythm” blues (IT’s slower, more processoriented pace); and IT’s perceived “What’s-therush?” view of marketing’s urgencies.
Despite it all, marketing and IT do share a
common objective—to support a CEO agenda
where the No. 1 priority is typically growth. The
challenge they face is in bridging the operational
gaps to create a partnership
that’s less executional and
more strategic in nature.
No marketing imperative
today can be met without the
capabilities and insights
provided by the organization’s
technologists. Marketers’
ability to leverage data more
effectively has become a
critical difference between
CMOs with serious internal
power bases and those who
just have lots of PowerPoint
decks on their shelves.
Whether it’s leveraging data
to more effectively segment customers, track
customers’ dynamic behaviors, feed true
loyalty/ROI/share-of-wallet metrics or provide the
input for more customized pricing models, IT has
the information marketing needs to get closer to the
customer and to help drive a CEO’s growth agenda.
Such information has enabled Best Buy to
advance substantially past typical loyalty programs
by using technology to identify its most profitable
customers and modify its product offerings in
direct response to their likes. It has also allowed
Best Buy to “fire” customers more confidently.
Harrah’s has used its data-rich customer
segmentation as a basis for customized marketing
and loyalty programs to help increase the lifetime
Scott Davis is
a managing
partner of Prophet
(prophet.com), a
consultancy specializing
in the integration of brand,
business and marketing
strategies. Davis has
written several best-selling
books on brand topics.
Contact:
sdavis@prophet.com
POINT MARCH 2005
5
PROCESS
MARKET
BUSTERS
HOW SMART BRAND MANAGEMENT CREATES
POWERFUL MARKETING OPPORTUNITIES
By Rita Gunther McGrath and Ian C. MacMillan
‘‘
The goal of a
consumption
chain analysis
is to identify the
experiential
activities (which
you can think
of as links in the
chain) through
which customers
are engaging,
some of which
involve them
buying something
from you.
6
’’
MARCH 2005 POINT
M
ost of your customers really don’t
care about what you sell. They
spend little time even thinking
about your service or product. In
fact, few of your customers or clients are likely to
regard doing business with you as an exciting
event. It sure isn’t a highlight in their busy lives.
Sadly, the business issues that seem so allconsuming from where you sit often have very
little resonance in the life of the customer. At the
same time, developing deep insight into what
customers do care about and why forms the
absolute core of organizational self-renewal.
A customer’s consumption chain—as its name
implies—represents the linked sets of activities
they engage in to meet their needs, incidentally
doing something that might generate a need for
something you have to sell. The difficulty is that
your customers evaluate their total experience
with your company as a whole—mess up one
significant part of it, and the whole relationship
can be in jeopardy, no matter how well the rest of
the operation performs. Moreover, if you are
working on a piecemeal concept of your customers
when your competition has a more holistic view,
you can find yourself unexpectedly at a major
competitive disadvantage if your competitor
figures out some way to dramatically change the
whole consumption experience for the better.
The goal of a consumption chain analysis is to
identify the experiential activities (which you can
think of as links in the chain) through which
customers are engaging, some of which involve
them buying something from you. Some chains
are relatively short and/or simple—for instance,
the immediate sequence of events that leads to a
fast-food chicken nugget purchase by a consumer.
Others are relatively long and/or complex—for
instance, the sequence of events that leads to the
commissioning of a production facility by a steel
manufacturer. The point is that each potential
customer’s chain offers a starting point to gain
insight into how you might create an offering with
marketbusting potential.
Marketbuster prospecting involves asking
patterns of provocative questions about how to
change the current consumption chain to one that
rewrites the rules of the game. We have identified
HARRY CAMPBELL
five Marketbuster moves that reflect firms’ making
changes to consumption chains:
■ Reconstruct the consumption chain,
replacing the existing one with an alternative chain;
■ Digitize and deploy ever-cheaper computing
and communications technologies to dramatically
enhance your offering;
■ Use digital intelligence technologies to make
an experience in the chain smarter, and thus easier,
better, more convenient or more user friendly;
■ Eliminate time delays in links in the chain;
■ Monopolize trigger events so that your
offering is the first or only one available at that
critical moment, so that you are uniquely positioned.
RECONSTRUCT
THE CONSUMPTION CHAIN
Look for opportunities to replace an existing
consumption chain with a new one that offers a
dramatically different experience for the customer.
Amazon.com, for instance, made headlines by
dramatically changing just about every link in the
book-buying experience, capitalizing effectively
on its ability to influence multiple links. For
example, it uses customer referrals to enhance the
awareness link, adds a new link by offering a “send
this book to a friend” feature, makes payment
easier via the “one click” payment system and even
makes money by providing a way for you to sell
used volumes.
In the early 1990’s, the entrepreneurs behind
upstart Coinstar, Inc (founded in 1991) saw an
opportunity in the consumption chain having to do
with loose change. For many people, the loose
change that accumulates on nightstands and kitchen
tables is a nuisance. And it’s a big problem—analysts
estimate that $7.7 billion in pocket change
circulates in the US every year, on average.
Traditionally, to turn that change into more
manageable bills required a tedious process of
sorting the coins into different types, rolling them
in paper tubes and taking them to the bank (during
normal banking hours, of course). Some products
attempted to address a portion of the problem.
Automatic coin-sorting machines, for instance,
allowed users to toss assorted change into a
CONTINUED ON PAGE 8
About the authors
Rita Gunther McGrath is
an associate professor of
management at
Columbia Business
School. Ian C. MacMillan
is the Fred Sullivan
Professor of
Management at the
University of
Pennsylvania’s Wharton
School.
Reprinted by permission
of Harvard Business
School Press. Excerpted
from Chapter 2 of
“MarketBusters” by Rita
Gunther McGrath and Ian
C. MacMillan. Copyright
2005. Harvard Business
School Publishing
Corporation; All Rights
Reserved.
POINT MARCH 2005
7
PROCESS
UNDERSTANDING A CUSTOMER
SEGMENT’S TOTAL EXPERIENCE
The goal of a consumption-chain analysis is to identify the steps your customers take to satisfy the
needs that they have become aware of (the links in the chain), some of which involve buying something
from you. The chart on the left shows what a typical consumption chain might look like for a
manufactured product. A different sequence of activities and links would apply to a service offering,
as demonstrated in the chart on the right. Note that the “service encounter” link repeats, with each
repetition representing an opportunity to either capture—or lose favor with—the customer.
A Consumption Chain for a Manufactured Product
A Consumption Chain for a Service Business
By breaking out the consumption chair into a series of linked events,
marketers can better understand what specific decisions—what links—
lead to the decision to purchase.
By analyzing each link in the chain as a new starting point, marketers
not only can improve the quality of the current transaction, but begin
working on renewals and referrals.
CONTINUED FROM PAGE 7
hopper, where a battery-operated device sorted
them by type and plopped them into preformed
tubes. But the coin-sorting machines addressed
only a part of the problem.
Coinstar pioneered an approach that
revolutionized the world of loose-change
processing: It developed equipment designed to
convert loose change to cash easily. Coinstar
machines, conveniently installed in supermarkets,
sort and count the change and issue a coupon that
can be used to buy groceries or to redeem for cash
at the checkout counter. Think of the impact on
the consumption chain – the sorting, rolling,
transportation and refunding links are all
completely eliminated by the device.
Naturally, this does not come for free. For such a
8
MARCH 2005 POINT
major enhancement in convenience, Coinstar’s
customers pay a fee of just under 9% of the money
converted. Isn’t that astonishing, when you think
about it—that customers would be comfortable
paying a substantial fee simply to change the form of
the cash they have on hand? And yet, developing a
comprehensive solution has created a marketbuster
for Coinstar. The company’s revenue growth has
exceeded 30% per year since 2001. In 2001 alone,
Coinstar converted $1.4 billion in coins in over
9,300 machines. Its revenues for 2003 were $176
million, with projected revenue for 2004 in the
range of $178 to $188 million.
THE DIGITAL ADVANTAGE
An obvious way to change a consumption chain is
to use digital technology to alter the way business
is done. Although the enthusiasm surrounding this
idea during the Internet bubble has certainly been
dampened, we believe that too many companies
have turned away from the real advances in digital
technology, most of which are only materializing
now that we have a decade or so of experience with
the Internet to learn from.
In 1999, CarsDirect.com was founded by Scott
Painter and e-commerce incubator idealab!’s Bill
Gross (founder of e-commerce incubator idealab!)
after Gross’s frustrating effort to buy a car online
through the referral sites that were the only
alterative then available. CarsDirect.com was
designed to help the knowledgeable buyer
complete the entire purchase transaction—
including researching, price-negotiation,
financing, and delivery—on line. Through a
network of cooperating dealers, CarsDirect.com
can consummate such deals without maintaining
inventory or the overhead of physical display
spaces. In addition, the company has introduced
unprecedented transparency in car pricing with an
innovative program that utilizes statistical models
to analyze nationwide price distributions. It sets its
price within the lowest 10% range for the model
being bought.
CarsDirect.com experienced extremely fast
growth during its first two years. It reported $15.2
million in sales during 1999 and $491 million
during 2000, with annual employee growth of
14.5%. In February 2001, CarsDirect.com
recorded record levels of traffic, reaching 1.7
million unique visitors, making it the 10th most
visited automotive related site in July 2001.
Carsdirect.com then went on to add new
channels to its car-selling business model.
Originally selling only new cars online, they added
the CarsDirect Connect and the CarsDirect
UsedCar channels. Launched in 2001, The
CarsDirect Connect referral channel gives
shoppers the option of being matched with a
member of the CarsDirect.com authorized dealer
network. This valuable service connects the
customer with a knowledgeable Internet
representative at a local dealer, who can provide
expert advice and guide the buyer through the car
purchase process. In 2002, the company launched
its comprehensive UsedCar channel, providing
the nation’s 30 million used-car buyers with a
wealth of free in-depth research, fast comparison
and pricing tools, expert purchase advice and
instance access to more than 400,000 late-model
cars—all in one convenient online marketplace.
To enhance the original concept of buying new
cars online, in September 2002, CarsDirect.com
started posting a monthly Best Bargains list. The
company’s pricing experts select top new vehicle
values from among 170,000-plus price
configurations available in the marketplace. The
CarsDirect.com Best Bargains list is designed to
help consumers cut through the clutter of
constantly changing manufacturer rebate and
incentive offers by presenting a periodic snapshot of
exceptional new vehicle buying opportunities.
Rebate and incentive changes are posted to
CarsDirect.com’s Rebates and Incentives Center as
they are published by each automaker.
CarsDirect.com is the only multi-brand car buying
website offering this level of real-world price
precision.
Of course, the jury on this attempted
marketbuster, of course, is still out. For one thing,
the competition has begun to emulate the same
simplification of the consumption chain explored
by CarsDirect.com, by enabling the total purchase
rather than a referral. Some early competitors,
such as CarOrder.com already have folded. What
is clear is that CarsDirect.com and its competitors
have dramatically changed customer expectations
for some important segments by digitizing the
experience. The proportion of people buying their
cars entirely on the Internet grew from 2.7% in
1999 to 4.7% in 2000. International Data Corp
forecasted that 7-8% of sales would be completed
online in 2004.
A powerful way to use digital technologies,
particularly for industrial customers, is in
minimizing the costs, risks and time consumed by
logistics. This has proved crucial in capitalintensive industries.
Occidental Petroleum, for one, has relied on
digitization to help it compete with the far larger
companies that dominate the oil and gas exploration
and production and chemicals businesses in which it
operates. It’s OxyChem subsidiary, for example, was
the first in its industry to embrace the utilization of
electronic technology to create a logistical
advantage for the company. It pioneered supplychain connectivity through the Envera network, in
which networked trading partners can exchange key
‘‘
Too many
companies
have turned
away from the
real advances
in digital
technology,
most of which
are only
materializing
now that
we have a
decade or so
of experience
with the Internet
to learn from.
’’
CONTINUED ON PAGE 10
POINT MARCH 2005
9
PROCESS
‘‘
One source of
marketbusting
opportunities
requires you
to really
understand how
much customer
time you’re
wasting and
to develop
offerings that
eliminate the
waste of time.
’’
CONTINUED FROM PAGE 9
transaction data, including purchase orders, order
acknowledgement, shipment notification, receipt
notification, invoicing and change orders. The
network lowers demand uncertainty, reduce
inventory on hand, improves product flow and
minimizes cost.
MAKE SOME LINKS IN THE
CONSUMPTION CHAIN SMARTER
This technique of hunting for marketbusters
involves looking at the links in a consumption
chain and asking whether value can be added by
making that link smarter. By “smarter,” we mean
adding intelligent attributes such as recognition,
responsiveness, interactivity or situation-specific
calculation to the link. The idea is that value comes
from information that you convey to the customer
at that link.
You can use any number of electronic
technologies to make a link smarter. Texas
Instruments, for instance, pioneered the use of
electronic intelligence when it began
commercialization of Radio Frequency
Identification (RFID) technology.
TI’s RFID tags can be found in such offerings as
the ExxonMobil Speedpass, which allows
consumers to pay for gas and other sundries
without having to swipe a credit card or pay cash.
The electronic tags, which can be hooked to a
keychain or placed in a credit-card-like plastic card,
are linked to a payment system customers have set
up in advance, which charges a credit card or other
account for the purchase. Mobil (prior to the
merger with Exxon) reported that Speedpassenabled gas stations captured up to 6% more
market share relative to ordinary gas stations
within the first year of operation.
ELIMINATE TIME DELAYS
IN LINKS OF THE CHAIN
Many customers are willing to trade off time for
money. This source of marketbusting
opportunities requires you to really understand
how much customer time you’re wasting and to
develop offerings that eliminate the waste of time.
Alternatively, you might find good ideas by
changing the sequencing of events in a
consumption chain to create more value.
10
MARCH 2005 POINT
Consider an activity as prosaic as buying a beer
in a sports stadium. In America, this involved
walking to a vendor, waiting in a long line, placing
your order with one of the waitstaff, finally getting
your beer (usually in an extremely annoying and
insecure plastic cup with a flimsy lid), and finding
your way back to your seat (“excuse me, sorry,
excuse me, just let me pass, sorry”), hopefully
before you missed anything exciting. Some
stadium owners began to try to improve the
experience by adding seat-based order takers, but
these people added to expenses and didn’t really
change the customer experience because, for the
most part, they were stretched too thin to cover all
potential customers.
Executives at Amaranth wireless, a privately
held company founded in 1996, saw an
opportunity to help stadium customers make
better use of their time. The company created a
handheld digital device connected to a local
network. With such devices in place, information
can be shared within the network at extremely low
cost. The initial application for the system
involved saving time by allowing patrons to order
food right from the handheld devices and have it
delivered to their seats.
Amaranth has since expanded aggressively into
a large number of arenas in which remote
connectivity changes the time spent at one or more
links in a customer’s consumption experience.
Primary client groups include restaurants, hotels
and hospitals, which utilize the devices to shorten
the time between making a request and customer
fulfillment. Restaurants, for example, can use the
software to pre-order drinks and appetizers for
patrons, even before they have been seated. Hotels
can use the technology to provide room service and
make the delivery of valet-parked cars faster.
Hospitals can process food and medicine orders for
patients more precisely and faster.
Sometimes, saving time can translate into
substantial cost savings as well. Princeton
Multimedia Technologies Corp. develops software
that helps nutritionists rapidly analyze patients’
diets and develop better ones. The company’s
ProNutra software calculates and manages
metabolic diet studies to eliminate paperwork and
provide more rapid turnaround of information.
While many clients are using the software as part of
weight management services for their customers,
substantial financial returns are expected from its
HOW TO
Reconstructe
the Chain
Digitize
the Chain
Make Links
Smarter
Eliminate
Delays
Monopolize
Trigger Events
■ Eliminate or combined
■ Use technology to
■ Deploy digital
■ Find delays between
■ Position your offering
“intelligence” to make
your offering more
responsive
■ Enhance the quality
or convenience of
each link
■ Create greater
awareness of the
link’s benefits
■ Discover a link’s
trigger point
demand and delivery
completion
■ Determine if delays
are expensive,
dangerous,
or frustrating
■ Eliminate or shorten
delays
■ Help your customers
reduce delays for their
customers
to monopolize a
trigger event
■ Be the first to know
that a trigger event
has occurs
■ Be the first in
customer’s mind when
the triggering event
occurs
■ Create triggers that
favor your offering
links in your chair
with other links
■ Replace one set of
links with another
■ Reshuffle links
to improve your
customer’s
experience
■ Can you a complete
solution to replace
a piecemeal solution
■
■
■
■
replace links
Use technology make
the customer
experience better
Use technology to
mine data
Use technology help
manage your logistics
Use technology find
new uses for the
information you collect
widespread deployment in pharmaceutical clinical
trials. Since an important control variable for a
clinical trial consists of monitoring nutrition
intake, delays in this process can end up delaying an
entire trial. Says founder Rick Weiss, “When you
save a day of clinical trials, you are saving the
company $1 million a day.”
MONOPOLIZE A TRIGGER EVENT
A manufacturer of specialized golf cleats had
designed shoes that were designed to improve grip
while remaining safe for the physical plant of a golf
course—a distinct advantage over the metal cleats
that were then standard.
The company could have approached large
retail stores, such as Sports Authority or Dick’s. Or
it could have approached specialty stores, on-line
providers or catalogs. It decided, however, to think
carefully about the trigger events that might lead a
golfer to switch cleatss. It concluded that, among
the likely events, would be the first visit or two to a
course that did not permit the use of metal cleats.
The next question: Who would be in a position
to influence the prospective customer? The
company approached two sets of potential
influencers. The first seemed obvious – golf pros at
such courses. The second was far less obvious: the
people who maintained the changing facilities and
who organized caddies. The company found that
these individuals had far more influence than was
commonly recognized on all kinds of purchases in
the multi-billion-dollar golf equipment business.
Access to the people with access to customers at a
critical trigger point proved essential to the
business’ launch.
Some companies are proactive as well in
creating triggering events that might stand in their
favor. The Jiffy Lube subsidiary of PennzoilQuaker State, for example, used research data to
create a potential triggering event.
Jiffy Lube’s main business is proving
convenient car maintenance services, such as oil
changes. Working with Harris Interactive, Jiffy
Lube found that most consumers were unaware of
how tough many of them are on their cars. Some
86% of the 3,345 people surveyed initially rated
themselves as normal drivers, yet readily agreed
that they engaged in behaviors that automakers
would classify as severe: taking short trips; starting
and driving without warm-up time; commuting in
stop-and-go traffic; hauling heavy loads; pulling a
trailer; and driving in extreme heat or cold.
More than 55% were surprised to discover that
automakers would classify such behavior as
severely damaging. Jiffy Lube’s management
publicized these findings during National Car
Care Month, encouraging drivers to adopt more
frequent maintenance procedures, thus creating a
trigger for the ‘awareness’ link in the chain and
hopefully increasing demand for the company’s
maintenance services. ■
‘‘
Access to
the people
with access
to customers
at a critical
trigger point
proved essential
to the business’
launch.
’’
POINT MARCH 2005
11
DARRYL ESTRINE
12
MARCH 2005 POINT
COVERSTORY
IT
ONLY
LOOKS
EASY
FOR BEN & JERRY’S WALT FREESE, TENDING AN ICECREAM ICON MEANS STAYING TRUE TO ITS CORE USERS
By Sarah Mahoney
W
alt Freese leads a double life. In
one role, the Ben & Jerry’s
Homemade CEO runs the
Unilever Corp. subsidiary with
simple marching orders that draw on the classical
marketing training that brought him up through
the ranks of companies like Kraft and Nestlé: Sell
more. And make more money doing it.
But there’s a twist: The European-based parent
excels at selling soap to billions. But Ben & Jerry
“fans” (not “customers,” if you please) hate the
thought that anyone is marketing anything to them.
But, if it’s to sell more ice cream, Ben & Jerry’s can’t
just go out and buy premium shelf space. Instead,
Freese must continually woo B&J’s loyal, leftleaning audience with just the right combination of
social activism and over-the-top unexpectedly great
flavors—an extraordinary marketing proposition.
Want to find another market share point?
Reach into the context of political values and come
up with a new product that speaks to your target
audience’s values. It may be a flavor linked to
energy issues (new this year is Fossil Fuel,
complete with fudge dinosaurs) or the presidential
elections (last year’s Primary Berry Graham, part
Walt Freese
January 14, 2005
Ben & Jerry’s, says Walt
Freese, has a brand equity
that compares favorably
to the mystique of Harley
Davidson. It’s a legacy he
fiercely protects.
CONTINUED ON PAGE 14
POINT MARCH 2005
13
COVERSTORY
FROM
PACKAGED
GOODS
TO DOGOODING:
Name: Walt Freese,
CEO, Ben & Jerry’s
Homemade, South
Burlington, Vt.
Age: 51
College: Colgate
University
MBA: Amos Tuck
School, Dartmouth
University
Hometown: Merrick,
N.Y. Just like co-founders
Ben Cohen and Jerry
Greenfield
Marketing
Positions At: Kraft,
Nestle, Casual Corner
Worst job: A summer
job “in book publishing”
that turned out to be
pulling skids of books
around a warehouse. “I
went back to college in
great shape, though.”
Best job: CEO/CMO
of Ben & Jerry’s.
Favorite flavor
that never was:
Britney Spearmint
About the author
Sarah Mahoney, a
freelance writer who
lives in Durham, Maine,
wrote about Kmart
in the December 2004
issue of Point.
14
MARCH 2005 POINT
CONTINUED FROM PAGE 13
of its Rock the Vote efforts).
“We’re really running a double bottom line,”
Freese acknowledges. “And there are days when I
feel like a U.N. translator, moving between both.”
There are even two translations of Freese’s title:
As CEO, he reports to Eric Walsh, who runs
Unilever’s Green Bay, Wis.-based ice-cream
group. (The company also owns Breyer’s, Good
Humor, Popsicle and Klondike.) But back home in
Vermont, CEO stands for Chief Euphoria
Officer—a title he picked himself. “My wife
warned me that people won’t take me seriously,”
he says. “I said, ‘Isn’t that a good thing?’” What’s
more Freese, despite his recent promotion, will
hang on to his chief marketing officer title as well
as CEO. (“Which means I’ll finally have an excuse
for talking to myself,” he jokes.)
At B&J’s South Burlington headquarters, a
day’s work doesn’t involve many mentions of
efficiencies or strategic planning, but more likely,
fierce debates about cultural and social values—
not unlike those Freese tackled in his years at
Celestial Seasonings, where he worked prior to
B&J. How should we buy coffee? (Only fair-tradecertified? All organic?)? Should we include hemp
as an ingredient in the new Magic Brownies
flavor? (“We decided to save that for another
day.”) Which rock star will we immortalize next in
ice cream? (“I’m not naming names,” says public
e-lations manager Chrystie Heimert coyly. “But
you wouldn’t believe the calls we get.”)
In some ways, life at Ben & Jerry’s is just a bowl
of Cherry Garcia. Among top 10 ice-cream
brands, it had sales of $198.8 million in
supermarket, drugstores and most mass
merchandisers for the year ended in January 2004,
reports Dairy Field magazine. It’s a figure that’s
only slightly behind arch rival Haagen-Dazs, with
sales of $217.3 million. Haagen-Dazs, observers
say, sells better in supermarkets, while B&J’s best
serves the 7-11 splurge crowd. In fact, the
company says B&J’s is the largest brand of all
packaged ice cream in convenience stores. Adding
in sales from B&J’s 450 franchised scoop shops
around the world, Freese explains, Ben & Jerry’s
total share of the super-premium market is
greater—even though he says Haagen-Dazs (with
a reported $20 million advertising budget)
outspends B&J’s in marketing by about 60%.
The hardest part of its 2000 acquisition by
Unilever—along with the subsequent layoffs and
closing of one of its three Vermont plants—are
behind it. Yves Couette, the Ben & Jerry’s CEO
Unilever appointed after the acquisition, has
returned to the mother ship in Europe. And
employees, for the most part, have gotten used to
working without either Ben Cohen or Jerry
Greenfield, the company’s charismatic founders.
(While both work at the board level, neither has
any operational role in the company.)
But there are plenty of challenges for Ben &
Jerry’s, too. There’s no arguing that the brand has
become a cultural icon—not many brands get to star
in an entire episode of “Everybody Loves
Raymond,” comfort Bridget Jones in her hours of
need or turn up in David Letterman’s Top 10 list
(with suggested flavors such as Zsa-Zsa Gaboreo and
Norieggnog). Or that it knows just how to romance
its 30-something fan base: It just introduced Marsha
Marsha Marshmallow, a new flavor that capitalizes
on everyone’s favorite “Brady Bunch” episode. But
keeping the brand—and the causes it allies itself
with—relevant is a constant struggle. Equally
challenging are America’s growing battles with
obesity: It’s harder to sell an artery-clogging, calorieladen product to the very people who have turned
dieting into a kind of religion.
And if taking a brand to icon status is hard,
keeping it there is even harder. “In many ways, I
think we’re like Harley-Davidson,” Freese says.
“Most of the people riding around on Harleys are
lawyers and accountants, not true bikers. But the
second that Harley lets those bikers down, and starts
selling to those other users, the mystique goes away.”
NURTURING THE LEGEND
You can’t be a brand icon without a museum, and the
Ben & Jerry’s factory tour of its Waterbury, Vt., plant
is the corporate equivalent of Graceland. Peppy tour
guides walk visitors through the movie theater,
presenting the Ben & Jerry’s story, past the corporate
timeline, detailing great ice-cream achievements
and past the company relics that hang on the wall.
Visitors are herded into a viewing room overlooking
the plant, and watch vats of Dublin Mud-Slide and
Chunky Monkey pour into pints. Next, a tasting,
and a quick tour through the gift shop: Tourists love
the quirky bovine humor and the souvenir T-shirts
(all from organically grown cotton).
It all starts, the movie explains, on suburban
Long Island, where chubby Ben Cohen and Jerry
Greenfield meet and become friends in a 7th grade
gym class. Fast forward to 1978, when Jerry and
Ben are now scruffy and unemployed hippies in
Burlington, a college town without an ice-cream
shop. They debate: Should they make bagels? Or
ice cream? Ice cream wins, since the
correspondence course costs just five bucks.
With $12,000, the two open for business in a
renovated gas station. The following winter, they
discover why Burlington didn’t have ice cream—
people don’t want it when it’s cold outside. To
celebrate their survival through that first tough
year, in true pioneering spirit, they give everyone a
free ice cream cone on the company’s
anniversary—still an annual tradition. Before long,
they came to stand for a company that cares, using
milk only from local dairy farms, from cows that
haven’t been given any growth hormones.
SHTICK BALL
As the company grew rapidly, the two developed a
shtick almost as fast as they churned out new flavors.
When a tasting bus crisscrossing the U.S. burst
into flames, for example, the company described it,
not as a tragedy (no one was hurt) but the “world’s
largest Baked Alaska.” B&J assumed fans shared
their political passions, but kept its messages
lighthearted. An early 1990s billboard protested a
New Hampshire power plant with the line: “Stop
Seabrook. Keep our customers Alive and Licking.”
And in 1994, when the founders decided it was
time to step back and hire a real CEO, they did so
with a “Yo! I’m your CEO!” essay contest.
Of course, this is the sanitized version of the
corporate history: There were plenty of wellpublicized missteps along the way, and plenty for
the P.C. police to snipe at: The CEO they hired, for
example, turned out to be a consultant from
McKinsey who wrote his essay after getting the job;
Rain Forest Crunch, yummy as it was, may not have
actually helped those Brazilian nut farmers much.
But part of the fun is that the corporate culture is
pretty candid about the flops. “It’s always been a
transparent company,” Heimert says. There’s even a
“Flavor Graveyard” on its factory tour, and a
company copywriter assigned to epitaphs: “Bovinity
Divinity (1998 to 2001) – was it just too sweet? Or
were those little chocolate cows just way too cute to
eat?” Of course, Freese says, some bombs hurt more
than others: He’s still bummed about the failure of
Ka-Berry Kaboom, an ice cream that contained a
Pops-Rocks-like candy and was linked to
playground safety.
For Freese, keeping Ben & Jerry’s on top means
maintaining that open spirit—even if there’s a new
owner nervously counting heads over in Europe.
His challenge, he figures, is to be a Unilever
subsidiary, but in a Ben & Jerry’s way. For instance,
Unilever requires that all marketing departments
produce a document known as a brand key. These
carefully honed keys are the basis of every future
marketing effort. Instead, Ben & Jerry’s cranked out
a “brand cone,” distilling the three core missions
(make great ice cream, improve the quality of life of
a broad community and oh yeah, make money) in a
single essence: “Joy for the belly and the soul.”
But he’s happy to steal a play or two from
Unilever, an organization that has elevated the
marketing process to a science: “Unilever has
some excellent marketing processes, which we’re
integrating into Ben & Jerry’s way of doing
business wherever it makes sense. A good example
of this is their IPM process ... short for
“Innovation Process Management.” We’ve been
able to use this framework for new-product
development to add a little more sanity and
discipline to balance our creativity.”
Of course, that’s not to say there haven’t been
moments of potential embarrassment for Unilever:
For instance, as part of the merger agreement, it
gave $5 million to the Ben & Jerry’s Foundation, as
well as $5 million to the company’s Social Venture
Fund. But after the merger, the foundation
promptly awarded large grants to such
organizations as the Ruckus Society, best known
for protesting globalization. In fact, the Ruckus
Society has “gotten Unilever quite a bit of negative
press in The Financial Times and other places,” its
executive director boasted in a newspaper story.
“The business community is saying, ‘What the hell
are you doing supporting these revolutionaries?’ ”
‘‘
At B&J’s
Vermont
headquarters,
a day’s work
doesn’t involve
many mentions
of efficiencies
or strategic
planning, but
more likely,
fierce debates
about cultural
and social
values.
’’
KEEPING THE BRAND FRESH
Introducing products that create joy for the belly
and the soul has always been tricky, and a certain
number will always land in the scrapheap. “Our
ideas have to be something special, something in
the ‘who-would-have-thunk-of-that?’ category,”
CONTINUED ON PAGE 16
POINT MARCH 2005
15
DARRYL ESTRINE
Walt Freese
January 14, 2005
Walt Freese grounds
Ben & Jerry’s marketing
efforts in a great product,
social missions, and an
enormous amount of fun.
16
MARCH 2005 POINT
CONTINUED FROM PAGE 15
Freese says. “What’s cool, fun, innovative, overthe-top? What aligns with our social values?
What’s going to sell ice cream?”
“We find that the more we pay attention to
consumer research, the safer we get,” Freese
muses. “So we try to pay less attention to it.” The
over-the-top ideas, he says, can only come from
people who like to have fun at work, who are
willing to take some risks. So headquarters is
inviting, relaxed—people bring their dogs with
them to work, beaded curtains dangle from
conference room doors, test kitchens have many
windows, so anyone can watch what’s cooking. A
life-size plastic cow migrates around the cubicles.
For inspiration, every employee gets three free
pints a day. (The ice cream is a kind of
underground currency. “I give mine to the guy who
shovels my driveway,” remarks one employee.)
It is the kind of company that is chaotically
creative: Tour guides are as apt to come up with a
new idea as marketing people, and many of the
best, including long-reigning No. 1 seller Cherry
Garcia, come from enthusiastic fans. (A visiting
New York Times reporter christened Karamel
Sutra, for example.)
New products always start by thinking in terms of
PR impressions—a good launch will generate 100
million. (The company estimates that it gets a billion
media impressions—which include any mention of
the brand—annually.) Advertising, or even
conventional marketing, is rarely part of the
COVERSTORY
conversation. “This is a brand that built its iconic
status not through advertising, but through guerrilla
marketing, through word-of-mouth and through
taking a position that went well beyond ice cream,”
says Charles Rosen, a principal at Amalgamated,
B&J’s advertising agency. “When we first met Walt,
he called himself the head of anti-marketing.”
“When developing marketing plans we focus
first on the things that we pride ourselves on doing
differently,” Freese says. “Event and guerrilla
marketing, social mission campaigns and PR. We
don’t have big mass-market budgets, so we have to
think differently … and it’s a lot more fun, anyway.
But it’s also a lot more challenging. We start every
year with a blank piece of paper, knowing that we
have to do something new, bold, progressive and
offbeat that hasn’t been done before.”
While the company will continue to rely on its
grass-roots heritage, Freese says advertising will play
a greater role in the months ahead. But it’s a
direction he’s inched toward very cautiously.
“Advertising, when we do it, will typically air in the
spring, as we enter prime ice-cream-eating season.
But the bar we set is pretty high. As an iconic anticorporate anti-brand, Ben & Jerry’s can’t do
anything that looks remotely like typical advertising.
“We’re very close, but we’re not there yet,” says
Rosen. “Our job is to sell ice cream, but not use the
company values to do it. To say ‘Buy our ice cream
because we want to stop global warming’ would be
a Phillip Morris thing to do, not a Ben & Jerry’s
thing. We can’t go out there big and loud about
values. Walt has been incredibly patient with
letting us test our boundaries,” Rosen says.
The key, Rosen says, is understanding the fans.
“They understand that we have to sell ice cream,
and that we have to make money. So as long as we
don’t sound like a bunch of funny 20-somethings
from New York City, as long as our marketing
efforts don’t shift what the brand means to fans—a
social mission, great ice cream and a fun way to sell
it—they’re cool with it.”
When all those components fire just right, it’s a
beautiful thing: The company is still basking in the
success of its 2002 One Sweet Whirled effort. Ben
& Jerry’s announced its collaboration with the
Dave Matthews Band, which was looking for a way
to speak out against global warming, and
Saveourenvironment.org, a coalition of leading
environmental groups, from Greenpeace to
Audubon to Environmental Defense, at a press
conference that drew senators, food critics, music
writers and CNN. The actual product launch—
One Sweet Whirled is an intense caramelchocolate mixture—was clearly beside the point.
Yet Ben & Jerry’s trucks went to all the band’s
concerts, scooping ice cream and distributing
literature to concert-goers. (The connection was
invaluable: The Dave Matthews Band, reports
Pollstar, was one of 2004’s hottest concert tickets.)
Such events offer B&J a distinct competitive
edge: “For Ben & Jerry’s, such events are
authentic,” observes Steve Woods, president of
EMG3, a Portland, Maine-based event-marketing
group. “People at the concerts are aware of the
company’s heritage, and the DNA. But if Haagen-
DEEP
FREESE
While there are plenty of
companies that try to
align a social mission with
marketing, B&J’s Walt
Freese says that five
stand above all others in
terms of “leading with
their values, being
innovative, and as a result,
are very successful:”
1. Patagonia
2. Tom’s of Maine
3. Timberland
4. Aveda
5. Stonyfield Farm
CONTINUED ON PAGE 18
POINT MARCH 2005
17
COVERSTORY
‘‘
Phish Food,
named for the
quintessential
Vermont band,
is dedicated to
increasing
awareness
about
environmental
issues in the
Lake Champlain
region of
Vermont… but
an awful lot of
people are just
happy to pay
$3.69 for a pint
of chocolatemarshmallow
heaven.
’’
18
MARCH 2005 POINT
CONTINUED FROM PAGE 17
Dazs did the same thing, it wouldn’t work . There’s
a huge difference between posing as an involved
company, and really doing something, and
customers can tell.”
Of course, not all its causes are global: Phish
Food, named for the quintessential Vermont band,
is dedicated to increasing awareness about
environmental issues in the Lake Champlain region
of Vermont. The beauty of such products is that, on
some levels, none of that matters. Sure, some
people buy the ice cream—or at least did initially—
because they are Phish fans. And doubtless, some
feel good that a portion of profits is donated to
making the Green Mountain State even greener.
(The company donates upward of $1.1 million a
year to its causes.) But an awful lot of people don’t
care about either: They’re just happy to pay $3.69
for a pint of chocolate-marshmallow heaven.
MARKETING A
VALUES-BASED PRODUCT
Freese, in his low-key way, has plenty of
experience swimming back and forth among each
group. In addition to marketing experience at
companies like Kraft, working at Celestial
Seasonings taught him plenty about marketing at a
company that is led by values first, and profits
second. A big part of that, Freese fans say, is his
ability to listen well. “He’s got deep values, and a
strong sense of respect for everyone,” says Steve
Hughes, a former Celestial Seasonings CEO who
now works as a consultant in Boulder, Colo.
“That’s how he gets the best work out of his team.”
“He always says, in meetings, ‘I reserve the
right to be wrong,”” Rosen says, “which is so
refreshing—so many clients say things like, ‘It has
to be bigger, it has to be blue’…and that’s just the
way it is.”
Nor is he afraid of going back and taking
another crack at something that failed before. For
years, the company has struggled with how it
should weigh in on America’s obesity epidemic.
On one hand, the company is famous for making
Chubby Hubby. On the other, healthy
ingredients, some of them organic, have always
been a core part of their mission.
But B&J’s Carb Karma line disappointed, and
Freese feels this year’s entry in the healthy-eating
category will fare much better. “We’re doing away
with our brief experiment with a low-carb
offering, and introducing Body & Soul, which is
indulgent, flavor-wise, made with all-natural
ingredients. It’s better for you than our regular ice
cream, but done the Ben & Jerry’s way.”
Also coming up: Mood Magic, a limited batch
inspired by a fan letter from a college sorority that
described Ben & Jerry’s as the preferred breakup
ice cream. Each pint package carries a picture of a
moon ring, which changes color from one
moment to the next. (The first Mood Magic flavor
is Chocolate Therapy). And Freese, who says
there’s still plenty of room to grow in ice cream,
bars and other frozen desserts, says the company is
looking at expanding into other food lines, as well.
But the long-term question for the company—
whether Ben & Jerry’s can continue to be an
American original under its new ownership, or
whether it will turn into just another pint in the
freezer–is still, admittedly, up in the air.
As long as they stay in step with the faithful,
Hughes says, Ben & Jerry’s has nothing to fear.
“Look at Stonyfield’s, which was acquired by
Danone. They’ve stayed true to their mission, and
done really well,” he points out. But the risk, he
says, is that brands are just like people. “And if you
sell out, you’re going to lose some friends.”
He doubts most ice-cream lovers have any idea
that Unilever owns Ben & Jerry’s. (There’s no
mention of it on the Ben & Jerry’s packaging.)
“And why should they know? People come to a
food brand for lots of reasons, but they only stay
for one—taste.”
Freese is philosophical about the future.
“Unilever has encouraged us to be a grain of sand
in its eye, and they want to learn from us, too.” But
he knows not all brands make such transitions
successfully. Unfortunately, he says, there are
plenty of examples of large companies acquiring
brands that are unusual, that occupy a niche, and
then homogenizing them until the brands become
… nothing special.
“For big companies, there’s a real value to
reducing complexity,” he says. “So our
challenge—and Unilever’s—is to decide if Ben &
Jerry’s can continue to be more unique, distinctive,
and risk-taking than most of its other brands.”
But in the end, he insists, the answer is about ice
cream, not ownership. “As long as we keep making
the best ice cream money can buy, fans will stay
with us.” ■
MIRKO ILIC
MODELING
WELCOME TO
CONCURRENCE
HOW A NEW MARKETING PARADIGM CAN HELP
MAKE STRONGER CONNECTIONS WITH CUSTOMERS
By J. Walker Smith, Ann Clurman and Craig Wood
I
n the February issue of Point, in a story we called “Getting Concurrent,” J. Walker Smith, Ann
Clurman and Craig Wood argued persuasively that traditional marketing models are outmoded and
imprecise—all but uselessly inefficient. “People want less clutter and more value,” they wrote. “Less
clutter means precision and relevance. More value means Power and Reciprocity. Less clutter
because of agreement and synchrony. More value because of cooperation and collaboration. Altogether,
these are the components of P&R2, the four cornerstones of concurrence marketing.
“The future purpose of marketing must be to sell more stuff with precision and relevance so that more
people will have the power to reciprocate more often for more money. Otherwise, marketing that sells
more will be winning a losing game because profitability and productivity will continue to deteriorate.”
CONTINUED ON PAGE 20
In the pages that follow, we follow through with Mr. Smith, Ms. Clurman, and
POINT MARCH 2005
19
MODELING
‘‘
It is smart
to look for
segmentation
solutions that
have a mix of
attitudinal,
demographic
and behavioral
data. Good
linkage
modeling work
can yield
assignment
accuracy
rates as high
as 90%.
’’
This article was adapted
from “Coming to
Concurrence: Addressable
Attitudes and the New
Marketing Productivity
Paradigm” (Racom
Communications: 2005)
by J. Walker Smith, Ann
Clurman and Craig Wood
of Yankelovich Partners,
Inc. Available at
www.RacomBooks.com.
20
MARCH 2005 POINT
Mr. Wood to see how concurrence marketing works. By putting attitudes and
insights first—before process—they contend that marketing can be more productive and, in turn, more
profitable. In this second excerpt from their work “Coming to Concurrence: Addressable Attitudes and
the New Marketing Productivity Paradigm” (Racom Communications: 2005), we pick up their
discussion on how addressable attitudes can be included in marketing systems to re-center organizations
on consumer-centric insights.
CONTINUED FROM PAGE 19
A
ttitudinal information cannot improve
marketing execution unless it is
deployed in a way that makes it
compatible with and usable by databases
and quantitative marketing metrics. Attitudes must
be included in all marketing execution systems.
Develop linkage models Linkage models are
the way in which attitudes are deployed for
marketing execution. Addressable attitudes are
created by models that link attitudes to individual
names and addresses. Syndicated systems such as
MindBase or Lists With Attitudes have already
developed linkage models, which have been used to
deploy addressable attitudes to third-party compiled
lists. Individual companies can overlay addressable
attitudes by sending a file containing names and
addresses to an allied third-party list company.
Names and addresses will be matched and the
addressable attitudes from either MindBase or Lists
with Attitudes will be scored onto individual records.
Proprietary systems require custom
development of linkage models. The first step is to
complete an attitudinal research project that
includes all of the variables from the database to be
scored with addressable attitudes. At the
conclusion of this research, two sets of models
need to be built. First, a segmentation model will
be built to assign people to tightly clustered
attitudinal segments. Twenty or thirty segments
are not uncommon since many segments are
needed to ensure a high degree of attitudinal
consistency within each group.
Second, linkage models will be built from the
database variables in order to score people into
segments without the attitudinal information. The
performance of these models must be rigorously
tested against holdout sample groups. These
models work better if it so happens that the
attitudinal segmentation also included nonattitudinal data in the final solution. So, as a rule of
thumb, it is smart to look for segmentation
solutions that have a mix of attitudinal,
demographic and behavioral data. Good linkage
modeling work can yield assignment accuracy
rates as high as 90%.
Create an insights repository The value of
addressable attitudes is best captured by means of a
formal structure that accumulates and stores
insights for use by the entire organization. This is
different than just sharing data. Already, most
marketing organizations make all types of data
freely available to every group within the company.
Each group makes its own use of the data, though,
often without benefit of insights that other groups
have developed from that data. These insights are
much more important than the data per se.
An insights repository is a meta-database that
functions as a large-scale cross-referencing system.
Each bit of data is tagged with a number of
additional links and identifiers that connect it to
other key facts and descriptors, such as:
■ Other pieces of data correlated with a
particular bit of information.
■ Predictive models making use of a piece of
data, and the sort of use made.
■ Prior marketing applications involving a data
element, and the success statistics for those
programs.
■ Reports that include a piece of data and the
conclusions and implications drawn that make use
of that bit of information.
■ Age and quality of a data element.
■ Internal experts who have made use of certain
kinds of data in the past.
■ Creative and strategic ideas associated with
various sorts of information.
This last element of an insights repository is the
most crucial. Insights Integration refers to the
organization of marketing around ideas rather
than processes. These ideas are connected to
attitudinal insights, so it is important to preserve
that connection in an insights repository.
Link to other systems and databases
Addressable attitudes must be incorporated into the
execution systems used to run marketing.
Prospecting lists must be scored with addressable
attitudes so that prospects can be targeted and
communicated with on the basis of attitudes. Media
buying databases must be scored with addressable
attitudes so that media can be bought on the basis of
attitudes. Marketing tracking systems must be
scored with addressable attitudes so that
performance can be tracked relative to attitudes.
Maintain self-optimization systems The
match of attitudes with individual names and
addresses should be constantly upgraded and
improved. Original assignment accuracy should be
improved as necessary. But the most important
factor is that the dynamics of the marketplace are
fast moving, so a system to ensure accuracy and
consistency will keep a system of addressable
attitudes up-to-date.
Different approaches can be used to update and
refine the match of attitudes to individual names
and addresses. Questions can be asked during
marketing or service contacts with individual
customers to determine how well their answers
match the scoring of addressable attitudes, from
which corrections can be made and linkage models
can be refined. Survey work can also be done to
make the same kind of assessment and model
refinement. Responses of individual customers to
marketing programs also provide an indicator
about the match of the addressable attitudes.
FROM ATTITUDES
TO EXECUTIONS
The purpose of addressable attitudes is to make it
possible for attitudes to be used directly in
marketing execution.
Conduct a profiling analysis The first thing
to do is to profile key customer groups with
attitudinal information. Transactional data should
be included so that the attitudes of high-value
customers can be identified and contrasted with
those of low-value customers. A relevant baseline
of comparison is needed, such as total category or
total U.S., in order to show the extent to which a
customer group is different or unique. These
differences are the basis for more precise targeting
and more relevant communications. Key insights
should be distilled from data patterns apparent in
the profiling and then used to develop plans for
marketing initiatives.
Enhance targeting models Addressable
attitudes can be added to target selection models
just like any other data element. The relevant test
will be whether the addressable attitudes improve
the predictive validity of the targeting models. In
many cases, addressable attitudes provide a
statistically significant incremental improvement
in models for target selection.
Attitudes can also be used to generate a list. In
this case, the attitudes themselves are the basis for
target selection, so there is no test of model
improvement. Instead, the response provided by a
list based on attitudes is compared to the response
generated by alternative lists. Almost all of the
time, lists created on the basis of attitudes
outperform other lists.
Build relevant offers and messages The
greatest value and impact of addressable attitudes
comes from improved marketing communications.
When people receive an offer or a message that
speaks directly to their lifestyle values and interests,
the marketing is well received. Such offers and
messages stand out against the background noise of
clutter, so these communications get more notice.
Not only do these communications generate
business, they boost a brand’s image because the
marketing itself is so much better. Better marketing
practice not only sells, it paves the way for the
future by strengthening the perceptions that
people have of a brand.
Advertise marketing practices The shift in
marketing practices made possible by addressable
attitudes is an improvement worth publicizing. It’s
what people are looking for, so marketers should
take credit for doing it. Marketing practices can be
a source of competitive advantage and brand
differentiation because nowadays, the value of a
brand is tied to its marketing practices no less than
to its product performance.
Test and re-test Experimenting with
alternative offers or variations on benefits and
language extend and deepen the insights provided
by attitudes. Marketing execution tests are an
important way of optimizing the productivity
gains generated by a marketing system based on
addressable attitudes.
RE-CENTER
THE ORGANIZATION
With addressable attitudes in place, a marketing
organization has the information needed to unify all
CONTINUED ON PAGE 22
‘‘
When people
receive an offer
or a message
that speaks
directly to their
lifestyle values
and interests,
the marketing
is well received.
’’
About the authors
J. Walker Smith,
president of Yankelovich
Partners, is co-author
of “Rocking the Ages”
and “Life Is Not Work.”
Ann Clurman, senior
partner at Yankelovich
Partners, has been the
intellectual force behind
the 30-plus-year-old
Yankelovich MONITOR.
She is co-author of
“Rocking The Ages.”
Craig Wood, President of
the MONITOR MindBase
division of Yankelovich
Partners, oversaw the
introduction of MindBase,
the first database service
able to merge attitudinal
data into transactional
databases.
POINT MARCH 2005
21
MODELING
‘‘
By and large,
marketing today
operates in ways
that create more
overload with
less value, so
people have
turned away in
annoyance and
disappointment.
’’
22
MARCH 2005 POINT
CONTINUED FROM PAGE 21
groups around a common set of customer insights.
No longer must some groups work with attitudinal
data and others with transactional data. Every group
can have access to the same insights. The customer
can now be heard by everyone in the organization.
Put attitudes at center of marketing
Marketing processes must step aside. Customer
insights must rule. Processes must be used only to
the extent that they serve the interests of
customers. Every contact is a marketing
opportunity if it is appropriate for what people
want. New contacts should be pioneered, but old
media should not be abandoned willy-nilly because
in many cases mass media will turn out to be a
better way of getting in sync with people’s attitudes.
Adopt a new internal vocabulary
Addressable attitudes bring individual people to
life. Marketers can stop talking about customers in
dry, scientific terms. Marketers can focus on the
interests of particular people instead of the
aggregate needs of a group of people. A vocabulary
rooted in attitudinal insights instills a stronger
sense of empathy throughout the organization and
strengthens the bonds between customers and
company service and marketing representatives.
Monitor impact Marketers must ensure that
concurrence marketing is having an impact.
Marketing clutter should be reduced if not
eliminated. Customers should perceive more
precision and relevance as well as more power and
reciprocity. Customers should be able to notice
and articulate improvements in their lifestyles.
Marketers must monitor these dimensions to
ensure that their marketing is showing specific
improvements in the areas that matter most.
Marketers should also see a measurable and
significant improvement in the productivity of
their marketing investments.
Engage customers Customers want to be
involved, so marketers should look for more and
more ways of giving people access to brands and
marketing. This should be an on-going search that
is constantly informed by customer suggestions.
Wherever possible, customers should be allowed
to manage the process themselves. And marketers
should be on the lookout for new forms of
reciprocity. Dissatisfaction as well as new lifestyle
interests are opportunities for more reciprocity.
Customers can never be too involved.
Marketers should look for every opportunity to
hand something over to customers. The job of
brand management should be to obviate the need
for brand management.
Do less. Get more Precision means zeroing
in on people who have the right attitudes. No
money wasted on those who don’t. Relevance
means talking to people in ways that are personally
meaningful and motivating. No wasted words.
More precision and reciprocity mean re-engaging
resistant consumers. Concurrence marketing is all
about boosting marketing productivity by getting
more while doing less.
Use new media to make old media better
The new media are not a replacement for the old
media. Never in history has an existing medium
been eliminated by the emergence of a new medium.
The roles of media change as technologies and
lifestyles evolve, but accumulation, not substitution,
is the pattern that media show over time.
Already, word-of-mouth and the Internet are
being used to make TV more involving.
Integrated uses of new and old media provide
better opportunities to deliver empowering
messages that offer people something interesting
and entertaining in return for their time and
attention. Besides, people have become experts at
multitasking across multiple media formats. Media
blending is smarter marketing.
BACK ON TRACK
The basic template for marketing is pretty
straightforward: Insights to Strategy. Strategy to
Tactics. Tactics to Results. Three basic transitions
that entail a number of components and systems.
Concurrence marketing improves all three.
The basic insights that drive marketing are
improved when addressable attitudes are used to
create a repository of knowledge around which the
organization can integrate its thinking and its
activities. The net result is a better link to strategy.
Strategy is improved when it is developed
around the insights-centric principles of P&R2
rather than the process-centric elements of the 4P’s.
Insights-driven strategies have a tactical connection
when consumers are involved in making things
happen and when the attitudes behind the strategies
are built into the marketing execution systems. The
net result is a better link to tactics.
Tactics are improved when attitudes are part of
the systems used to run marketing programs. The
net result is substantially better performance.
In years past, marketers have done a very good
job of working with demographic and behavioral
data to create value for their businesses.
But the point of diminishing returns has been
reached. Further improvements are only going to be
incremental, and they will come at great expense.
Productivity gains will be smaller and smaller.
Something new is needed, not new ways of doing the
same old things. Attitudes are the next opportunity
for big leaps forward in marketing productivity.
Marketing has been buffeted by a gale force of
change over the past decade. Many pundits have
wondered if there is a future for advertising and
advertising agencies. Make no mistake, there is a
bigger role than ever. Insights are the stock-intrade of ad agencies and insights are the essential
requirement for success in the future.
But agencies have developed and delivered
these insights within the framework of a media
environment that no longer exists. The future of
agencies must be about the creative use of insights
in the context of the new media environment,
which means integrating insights, attitudes
specifically, into the marketing execution systems
that have operated without attitudes in the past.
Insights are no less important just because the
mass media are fading away. Indeed, they are more
important than ever. Ad agencies are, too.
It’s been said that marketers now operate in an
“attention economy,” a marketplace in which
people’s attention is the scarcest resource and the
most valuable media inventory. Information
overload is said to have created an economy driven
by a new currency, which is the attention that
people are willing to pay to things. In this
economy, marketers have no control over the most
precious resource and inventory. Marketers
cannot negotiate with one another to get more
access to or better prices on people’s attention.
Customers control what marketers need most.
Actually, though, the attention economy is no
change at all. Marketers have always pursued
people’s attention. Marketers have always looked
for new ways to get in front of people. Marketers
have always coveted people’s attention. And even
with less information in the past, people have always
had more things to attend to than they had the time
or energy to devote to them. The attention
economy is at least as old as marketing itself. There’s
just a lot more information these days, and a much
HOW TO PUT ADDRESSABLE
ATTITUDES IN PLACE
Each marketing organization will find its own path to becoming an insight-centric
organization practicing concurrence marketing. But in every case, addressable attitudes
are required. Only the attitudes that matter should be gathered and compiled, including:
Lifestyle information Typically, marketers have lots of information about
product attitudes but little if any information about lifestyle values and preferences.
People don’t want product satisfactions so much as they want products that provide
lifestyle experiences.
Attitudinal drivers The attitudes of greatest interest to marketers are the ones
that drive or motivate consumer behavior in the marketplace. Attitudinal drivers are
most reliably estimated as constructs composed of multiple, related variables rather
than single variables alone. Individual questions are not as stable as multivariate
constructs nor do they fully capture the many nuances that characterize most
attitudinal factors.
Power and reciprocity These are two crucial dimensions for concurrence
marketing. But different people will want to receive and exercise power and reciprocity
in different ways. This will vary by category and brand as well.
Demographics and behaviors Just as demographics and behaviors are not a
substitute for attitudes, neither are attitudes a substitute for demographics and
behaviors. The fact that attitudes have more breakthrough potential than
demographics and behaviors does not mean that attitudes should be used in place of
them. Demographic and behavioral data play an important role and provide a
necessary foundation. Concurrence marketing can be practiced with nothing more
than addressable attitudes, but the combination of the three is the most powerful
platform for highly productive marketing.
stronger perception of a time famine. But to at least
some degree, attention has always been scarce.
What’s new is marketing resistance. Attention
is not just scarce. Nowadays, attention is being
actively, intentionally and often maliciously
withheld from marketing. While more
information than ever competes for people’s
attention, that fact, in and of itself, is neither good
nor bad for marketers. It all depends on how
marketers operate. By and large, marketing today
operates in ways that create more overload with
less value, so people have turned away in
annoyance and disappointment.
There is a different way to operate, however,
and that way is concurrence marketing and the
principles of P&R2. Concurrence marketing is not
a magic bullet that will cure marketing overnight.
But it is the way to improve the fortunes of
marketers struggling to boost marketing
productivity in the face of consumer resistance and
a rapidly changing marketplace. Concurrence
marketing makes marketing worth it. And when
marketing is worth it, people will pay attention. ■
POINT MARCH 2005
23
GREAT GLOW
OF CHINA
China’s economy is growing three
times faster than the U.S.
“China’s economy will overtake the U.S. economy
in total size by around 2020, albeit with a per capita
income around one fourth of ours, balanced by a
population roughly four times our own. By 2050,
China’s economy will be almost twice the size of the
U.S. economy, with a per capita income that could
equal half the U.S. level.”
—Jeffrey Sachs, director of Columbia University’s
Earth Institute and director of United Nations
Millennium Project, Esquire magazine, February 2005
20 million
Chinese who traveled abroad in 2003; 100 million
Chinese are projected to travel abroad in 2020
98
40 million
Estimated Chinese households with annual income
of $12,000 or more (15% of total households)
$47 billion
Size of China’s packaged foods market
(expanding annually at 8%)
$3 billion+
Size of China’s toiletries/cosmetics market. Market
projection for 2013: $22 billion
33.29 million
Beer drinkers in China. Wine drinkers: 7.98 million
95%
Kodak cameras currently made in China. Monthly
wage for Kodak production workers in China: $120
Number of cities with more than 1 million people.
Regions in China: 70. Ethnic groups: 56.
Languages spoken: 80
3%
Chinese households with a mobile phone in
1994. Households with at least one mobile
phone 10 years later: 48%
24
MARCH 2005 POINT
10%
Chinese households with a landline telephone in
1994. Today, 63% of households currently have
landline phones
Some 6,000
foreign-funded
businesses
have offices
in Pudong,
Shanghai’s
glassy downtown
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