Life and segmentation

Our final “Intro to Marketing” class in graduate school aimed to condense some of the most important insights from the class and apply it to our lives. To that end, our Professor re-shared a simple definition of segmentation – “Your ideal segment is one that loves what is good about you and doesn’t mind what is bad about you.”

He went on to explain that the quality of the most important choices we make – finding a spouse, a job, friends, managers – comes down to our ability to understand this truth.

This remains one of the more powerful insights I took away from studying marketing. We’ve all been in environments where we can bring 100% of ourselves. In such places and around such people, we’re appreciated for who we are and not dinged for who we are not. Being in environments that do the opposite can grate on a day-to-day basis.

The natural response to such environments (or people) is a feeling of inadequacy and a desire to change who we are. Roughly half the time, that feeling of inadequacy is well placed. We do need to change, to evolve, and to become better versions of ourselves. What got us here won’t get us there.

However, on the flipside, when this happens, it is also worth exploring if the environment and the people in it are our segment. Sometimes, it just means we need to do a bit more research and exploration to find the right segment.

PS: Applies to building products too.

Managing perception and leading with it

“Perception becomes reality” – is one of the marketing’s cardinal principles. Taken to its extreme, it could mean working away at improving our perception, i.e. “our brand,” at the expense of everything else. In this race to improve perception, it is easy to forget that…

… companies renowned for good customer service start by providing great customer service.
… we get better at leadership by caring more about people, processes, and results than the next person.
… a person’s network is directly proportional to a person’s net worth – valued either by money or by character – sometimes both.
… and so on.

Perception undoubtedly matters. But, building a brand on perception is akin to vaporware. A select few manage to use the fuel from vaporware to build great products. Most don’t.

The most reliable way to build brands – organizational and personal – is by actually doing/building good things that create value and/or impact people in positive ways. Once you work on improving reality, it is critical to manage perception.

But, beware leading with it.

How we were sold tobacco, bacon and the ideal of thin women

Edward Bernays is one of the most influential persons in the 20th century. He is considered the father of “Public Relations” and changed how we think of mass marketing and advertising at scale. And, yet, it is likely you’ve never heard of him.

Despite his enduring impact on the world, there are many reasons for this lack of popularity. However, chief among them is a reluctance among the folks in his industry to talk about his work. So, you don’t hear Marketing professors or advertising executives mention him or his work. Not doing so denies some fascinating lessons that might shape how we think about the attention economy.

Edward Bernays and Propaganda
Edward Bernays was an Austrian American whose family moved to the United States in the 1890s. He spent the early part of his career as a Medical Editor and Press Agent. In both these roles, he showcased an ability to take strong positions on certain causes and successfully solicit support from the public — among them elite figures like the Rockefellers and the Roosevelts.

After the US entered World War I, he was recruited by the US Government’s “Commission on Public Information” to build support for the war domestically. Since a large portion of Americans had just fled Europe, this didn’t make much sense. But, Bernays coined a phrase — “Make the World Safe for Democracy” that became the meme President Woodrow Wilson needed. It gave the senseless war a higher purpose. And, Bernays began referring to his work as “psychological warfare.”

Bernays also added significant artillery to his propoganda techniques. He did this by incorporating the lessons from a then-infamous psychologist uncle who’d published work about how individuals are driven by unconscious needs, desires, and fears. Sigmund Freud, until then, was a relative unknown as he had been scorned by European society. But, his nephew, Edward Bernays, made him and his work famous in the United States and ensured he attained fame and prestige. Bernays applied his uncle’s insights to great effect by manipulating public opinion through mass media. As he became the world’s foremost expert in propaganda, he realized it was as powerful a tool in peacetime as it was during war.

So, after the war, he moved to New York and decided to counsel companies in propoganda. However, since the word propoganda was controversial and since its alternate “advertising” was too mundane, he decided to rename it “Public Relations.”

Why tobacco and bacon are great for you
Sadly, Bernays’ counsel was sold to anyone who cared to pay him well for it. And, chief among his clients were the tobacco companies and the pork industry. In his work with them, he demonstrated his skills as a master campaign strategist.

For example, he staged the “Torches of Freedom” event during the 1929 Easter Day Parade as a means of conflating smoking and women’s rights. Tens of millions of women threw off their shackles to claim their right to smoke in public.

His media strategy involved persuading women to smoke cigarettes instead of eating. He began by promoting the ideal of thin women by using photographers and artists in newspapers and magazines to promote their “special beauty.” He, then, had medical authorities promote the cigarettes over sweets.

Bernays also pioneered the covert use of third parties. For instance, he conviced a doctor to write to 5,000 physicians asking them to confirm that they’d recommend heavy breakfasts. 4,500 physicians wrote back and agreed. He arranged for these findings to be published in every newspaper across the country while stating that “bacon and eggs should be a central part of breakfast.” Sales of bacon went up.

 

The Engineering of Consent
Bernays called his brand of mass manipulation the “engineering of consent.” He worked with every major political power during his day to help provide the tools to non-coercive control of the mind. In 1928, he crystallized some of his lessons in his book “Propoganda.” Here’s a passage that describes his thought process about the importance of his work in society —

“The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country. …We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of. This is a logical result of the way in which our democratic society is organized. Vast numbers of human beings must cooperate in this manner if they are to live together as a smoothly functioning society. …In almost every act of our daily lives, whether in the sphere of politics or business, in our social conduct or our ethical thinking, we are dominated by the relatively small number of persons…who understand the mental processes and social patterns of the masses. It is they who pull the wires which control the public mind.”

Enid Blyton and Bernay’s popularity
When I was growing up in India, books from “Enid Blyton” (a British children’s authors) were recommended reading for all kids. I was a huge Enid Blyton fan myself. One of the enduring memories I have of her storytelling is her focus on food and her insistence — via various characters in the book — that “bacon and eggs was the best breakfast in the world.” As I grew up and learnt more about bacon, I couldn’t understand why she said that.

Now I do.

Edward Bernays held the masses in contempt. That’s why we don’t know much about Bernays. He simply didn’t care about popularity in the eyes of those who he held in contempt. As is evident from the Enid Blyton story, the impact of his techniques on society are undeniable. Every marketing and PR campaign since has used his techniques to shape our minds. We study his work in every case on mass marketing — without ever referring to him.

The incredible jump in the proportion of British workers who voted “leave” in the 2 months before the EU referendum would not have been possible if it wasn’t for Bernays techniques.

 

3 notes to ponder 

(1) Many column inches in the past year have been devoted to the role ads and social media have played in the tumultous political climate in the past couple of years. Here’s what scares me — a large proportion of the population is responding by consuming and discussing events on private messaging tools like Whatsapp. The Reuters Insititute confirms this trend among younger Americans. If you think polarized social news feeds can be propoganda carriers, you haven’t experienced the power of Whatsapp in spreading lies (see this and this).

(2) How would we go about learning marketing and public relations if we studied the life and work of Edward Bernays? I understand why professors and executives don’t want to talk about Bernays. Discussing his beliefs and techniques can seem akin to touting the power of the dark arts. But, every useful tool has its dark sides. And, the founding story of the PR industry is a great example of that. It is not an example we should avoid. Instead, it is a story we must learn from. It’ll make us all better marketers and, perhaps, better human beings.

(3) I was one among many who was surprised by the size of the impact of social media tools on the global politics. In retrospect, there were many warning signs. But, hindsight is always 20:20. That said, I don’t think I’d have been anywhere as surprised if I’d read the Edward Bernays story. The story of the propoganda maestro from a hundred years ago, it turns out, is very relevant today.

History doesn’t repeat itself — but it rhymes. It is why any attempt to understand the present and predict the future is futile if it isn’t preceded by an understanding of history.


Links for additional reading

Waiting 15 minutes to try out a watch

I needed to charge my phone when I was out last weekend and went down to an Apple store in the mall and asked if I could borrow a charger. As my phone was getting charged, I thought I’d ask to try out a watch. I was politely told that I have to wait 15 minutes to try out the watch. Would I be willing to wait?

Since it would take that long for my phone to get charged, I said sure.

And, so, I waited. Every 5 minutes, I’d have one of the store folks walk up to me and say – “Thank you so much for your patience. You are #__ in queue.”

And, 15 minutes later, I was told I could finally try it. It turned out to be quite the anti-climax as the queue was for a blank watch with a screen wiped out. The wait was only to test how the watch feels on my hand. I soon realized I could have played with the watch’s user interface without waiting 15 minutes. But, as I walked out, I reflected on how ridiculous this would be in any place but an Apple store. If the screen is blanked out anyway, why not just have a few more straps lying around? While the official reason is that this is to guard against theft, I think they have other more strategic reasons.

Apple would like two things to happen with customers interested in the Apple Watch –
1. They want the trial to feel special – sort of like test driving a Lamborghini. Anticipation brings excitement -> Marketing 101.
2. The first generation of the watch is far from perfect. While I enjoyed playing with it and can see utility, it is similar to the first generation of iPhone. Potentially revolutionary, but not fun to use as yet. So, Apple would want the sort of person who wouldn’t mind waiting hours in the queue or, in this case, wouldn’t mind waiting 15 minutes to just find out how it feels. This sort of person would fall in love with the watch right away and wouldn’t mind the fact that it is buggy. This sort of person would also report the bugs and make sure the next version is much better.

Apple doesn’t want a customer like me. So, it does things that alienate me. Instead, it focuses on the real fans. Smart strategy.

The only caveat – there are very few companies that can pull this off. Don’t try this at home..

The Dropbox peace-of-mind – MBA Learnings

If I had to summarize my learning on pricing from my Microeconomics classes, it would be -> avoid price competition like the plague. And, to do that – differentiate, differentiate, differentiate.

We discussed Dropbox’s move in August last year to lower prices to compete with Google, Apple, Microsoft and Amazon. The big question was whether this was going to be a race to the bottom in a future where storage would inevitably be free?

Now, Dropbox is one of my favorite products. I have been a user since the early days when they used to be hosted on “getdropbox.com” and their brand has nothing but positive associations. All my working files sit on my Dropbox folder and, ever since I did that 3 years ago, I’ve never had to fret about whether my working files will ever be lost.

So, I thought I’d put together 2 recommendations for Dropbox based on what I’ve learnt in Marketing and Microeconomics in the past few months. These recommendations are based on the principal that differentiation matters. If we make the argument (and we can) that most storage providers inherently offer a similar product, the game-changer will be Dropbox’s ability to horizontally differentiate, i.e., inspire great brand loyalty among its users. That, then, leads us to a marketing question – how can they do that? My line of thinking is to think around the traditional 4 P’s – product, price, promotion and place. And, my 2 recommendations are going to be based on promotion and price –

1. Target the peace-of-mind business. The question is – what can Dropbox do to differentiate? That leads me to – what is the market? The first answer seems to be storage. But, is it really storage? Or, put differently, do we want it to be storage?

When I look at why customers use Dropbox, collaboration is obviously a massive reason and is at the core of why they do what they do. They have understandably worked really hard at making collaboration easy. My recommendation would be to also target the peace-of-mind business. Every user who collaborates via Dropbox likely has many important files on it. Why not just move them all onto Dropbox and make it a full set?

I pay Crashplan a yearly fee to back up my photos. That could easily be Dropbox. I think Crashplan works fine but I don’t love Crashplan the same way and would be more than happy to pay a bit of a premium for that love and trust.

In short, I think the customer problem that Dropbox could look to solve is to remove the worry about files not being backed up. This needs an investment into customer education and a few tweaks into the way it is marketed. But, if done well, I think this could be a huge win.

2. Get creative with pricing. The current “band” approach to pricing from the storage providers is staid. The problem with bands is that it only feels like a good deal if you are near the edge of the next band. Why pay $10 for 1 terabyte if all you have is a 100 GB worth of content to store.

An approach that could be really impactful is Amazon Web Services-style “you-pay-for-what-you-use.” This could work well for 2 reasons –
1. Foot-in-the-door. Even if I’ve not fully made up my mind, I could put in 10 extra GB into my Dropbox folder and try it out for a month. Once I’m in and experience the peace of mind, it’ll be hard to get out.
2. Customer’s use will expand with time. It is much easier to get a customer paying $6 to pay $10 vs. one paying $0. This use expansion is part of the reason behind the fact that Dropbox and Netflix still use AWS for storage.

Dropbox has a strong edge when it comes to differentiation because its brand associations are all linked to storage. Amazon, for example, has begun offering photo back up for free for Amazon Prime members but I still haven’t checked it out because I don’t associate Amazon with photo storage (yet). It’ll be interesting to see how the storage wars play out. Good luck, Dropbox!

The opposite of viral

I know a lot of content creators (bloggers, video creators, etc.) would love for a post to go viral. It is one of those fascinations when you start a blog or video channel and wonder what going viral might be like. It doesn’t help that you see all sorts of random content go viral and think – “Hang on a second, so much of my stuff is better/funnier/nicer/more meaningful, etc.”

After nearly 7 years/3365 posts, my learning has been to not hope for viral. In fact, I’d even say – dread viral; because viral brings fleeting fame and you don’t really want fleeting fame. You’ll find many who’ll show up to read that one post or watch that one video and simply go away. The spike in your analytics will soon be gone as well. Nothing tangible would have been built.

Instead, focus on slow organic growth (the keyword here is slow because it is incredibly slow). Delight one reader or viewer at a time. Over time, if you are lucky and good, you’ll find a small group of influential readers who begin spreading the word about your work. Now, instead of one reader, you’ll have two who show up every day. Then 3, then 4, and soon, it catches on. The nice thing about such growth is that you grow with your reputation. You learn how to build your video channel in a sustainable fashion and don’t resort to gimmicks. That builds trust and trust is how important things are built.

Viral, on the other hand, is devoid of trust and, as a result, a sham. You deserve better. Those whom you delight and serve deserve better too. So, if you are creating content, I wish you the opposite of viral. And, I wish you the strength and courage to keep at it for 10 years. Rome was not built in a day. Enron was.

Ask the customer – MBA Learnings

When we encounter a situation or problem, we always have an intuitive response to it. And, one of the biggest learnings in the first 2 weeks of our marketing management class has been to remind ourselves that we are weird and just “ask the customer.” This is because many of the decisions we make involve other people as our customer – e.g., decisions we make within our companies that impacts our customers, consulting advice we give to clients, and other help/advice we offer to friends or family. “Ask the customer” doesn’t always translate literally to asking the customer what they might want. It involves really understanding the person/organization we’re creating a solution for.

The best illustration of this is from an excellent TED talk by Rory Sutherland

“Here is one example. This is a train which goes from London to Paris. The question was given to a bunch of engineers, about 15 years ago, “How do we make the journey to Paris better?” And they came up with a very good engineering solution, which was to spend six billion pounds building completely new tracks from London to the coast, and knocking about 40 minutes off a three-and-half-hour journey time. Now, call me Mister Picky. I’m just an ad man … … but it strikes me as a slightly unimaginative way of improving a train journey merely to make it shorter. Now what is the hedonic opportunity cost on spending six billion pounds on those railway tracks?

Here is my naive advertising man’s suggestion. What you should in fact do is employ all of the world’s top male and female supermodels, pay them to walk the length of the train, handing out free Chateau Petrus for the entire duration of the journey. Now, you’ll still have about three billion pounds left in change, and people will ask for the trains to be slowed down. ”

We’re wired to think of situations from a point-of-view that is recently available to us. I hesitate to even call it our point of view because, sometimes, we take advice we receive too literally and forget to filter it to suit our own style. In short, our intuitive responses make us inadequate givers or takers of advice.

So, the next time you’re making a decision that influences a customer, take a moment to reject the intuitive response. Take a moment to think about how the customer behaves – ignore what they say and listen what they do. It is likely you will be closer to an answer that will work within that context.