How to use your A&P budget wisely

July 31, 2011 § 1 Comment

I recently read an article “Branding in the Digital Age: You’re spending your money in all the wrong places” by David Edelman from HBR December 2010 issue that made me review my own A&P investment strategies and I have to acknowledge that until this moment I’ve always believed that a great product design and some quality tracking was enough effort on the post-sale and I mainly focused on creating demand (pre-sale efforts).

As Mr. Eldelman explains, we continue to use PUSH strategies to obtain brand consideration, leading to a sale. A consumer needs to know-you, consider-you, approve-you, buy-you. Hence, most expenditure is focused on the first two (knowledge, consideration) and just a bit of price discount with the purpose of building the greatest “Consideration Universe” assuming in the way that the conversion is based on price or other ‘traditional’ paradigms that we don’t challenge. We continue to forget out Consider-Buyer ratio.

In my experience, consumers like to know how a product will perform prior to purchasing-it… This is the reason infomercials work. Of course a great brand has “the performance” in its DNA. This value is also inheritable (umbrella brands). But what happens when you have 2 equally performing products?

What happens if your product is new or Brand? Or you cannot use a mother Brand? Henry Ford once said “you can’t build reputation on what you’re going to do” but YOU CAN… you can hire a spokesperson (someone whom the consumer trust) to speak on behalf of your brand… or as Henry Ford would advise, work hard, wait for results to happen an if you’re intelligent, ask them to share their experience.

A clear example of the importance of reputation I learned from very underprivileged people that live in Venezuelan ‘Favelas’. Mothers of toddlers maintain their kids naked during the day, so if they need to go, it’s easy to clean the mess. But at night, there are no cradles and the whole family sleeps in the same bed (4-5 members) so they cannot afford for ‘an accident’ to damage their only mattress. They have become the Heavy Users of the premium Diapers Brand. They know that if the diaper is only urinated it may be reused, else it’s thrown away. They could buy 2 or 3 times as many diapers from private label brands, but premium branded brand provides a sense of security that allows them to sleep at night without worrying that a leakage can ruin their only mattress.

Performance is so important that these women will tell their friends their experience and recommend first-time moms to use the same strategy. This is more evident in other businesses (such as electronics) where online reviews are available.

Keep in mind that it’s all about the product’s reputation… It convinces consumers to pay a little extra for the product that provides confidence.

This reputation-recommendation can be handle by using a stewardess on the point of sale (someone to speak on behalf of your brand), and almost all sales people will agree that having them in front of the shelf is a sale booster… but it’s a very expensive booster, so, wouldn’t it be great to have these ‘boosting’ results at a lower cost?

The important question is how to manage doing this if all the resources are “creating demand”? Do you still need so much consideration that can be lost on poorly rated reviews? Are you efficient on your conversion rate or you simply don’t care? Is being efficient a better strategy? Only proper research can help you answer these questions, but keep in mind that a consumer recommendation is worth several minutes of TV time.

I know we shouldn’t extrapolate our own environments to consumer behavior, but if you believe in any kind of ‘gut feeling’ this will speak to you.

What influences you more when buying a soda: the last TV Spot that you saw? Or someone in front of a vending machine on a hot summer day with a smile on the face and the “ahhh” after drinking the first gulp of soda? How about a radio spot for a car repair service Vs a recommendation from a friend experiences?

Don’t get me wrong, I believe in ATL and it really works (especially if you sell FMCG) but are you bold enough to put all eggs in that same old basket? What happens if you go to a vending machine with the X brand on mind, but hear someone saying that X-brand is warm and Y-brand was a wiser choice? Are you that loyal to keep buying a warmer X-Brand Soda? Is the community that loyal?

ATL’s #1 rule is that there is a lot of waste:

  • People zapping or with digital recorders.
  • People that won’t consider the category.
  • People that won’t consider your message relevant (after all it’s a one-size-fits-all message)
  • People that are loyal to your competition.

On top of that, by my standards, you need either a huge impact (such as Super-Bowl event) or 3-5 TV spot exposures to be considered as a reached viewer, which seems pretty expensive, however, a fulfilled consumer <someone whose experience was so great that is willing to speak on your behalf> only needs one ‘exposure’ to give a more impactful, richer message.

Are we investing correctly on out A&P using 75-80% of it on ATL and almost the rest on BTL with little use of Customer Service? Why do we keep thinking that Customer Service is not marketing? Why do we stop watching consumers after the sale has been achieved and only care to review the product’s quality hoping to avoid a massive disaster (a recall)? Are you immune to a United Breaks Guitar Event?



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§ One Response to How to use your A&P budget wisely

  • elangovan1 says:

    To best of my knowledge, united airlines recruited the same guys and tried improving its brand image and communicate to the customer that they do care the customer comments and suggestion.

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