7 Rules of Marketing that Get Results

by Temel Aksoy

  Touching triggers the feeling of ownership. Sales increase if products are displayed so that people can easily touch them, because people begin to feel ownership (and endowment bias) when they’re able to touch a product. Retail sales are based on allowing shoppers to feel and try the product in the store.

  Large shopping carts create the false impression that the cart is empty and that shoppers haven’t gathered that many items, so they’re misled into thinking they can buy more.

  Some propositions create the feeling in shoppers that an opportunity will be missed because the store puts a time limit on promotions or discounts (the last day) or emphasizes a countdown, which, of course, accelerates sales.

  On discounted products, displaying the old price in smaller writing and the new price in larger writing also boosts sales.

  Paco Underhill says that when people put fresh, healthy products in their carts first and then head for the junk food section, they feel less guilty. Therefore, vegetable and fruit sections are located at the front of the store.

  Colorful and bright visual arrangements that feature contrast attract attention. This is why the color red features prominently on the packaging of most brands.

  The effect of smell is at least as powerful as that of color. The smell of fresh coffee or bread is used in markets to encourage people to shop. The fragrances that people smell are generally not coming from the products themselves but from fragrances the markets intentionally emit.

  Countless practices like this are used in shopper marketing. Some of these might be considered unethical, but almost every sales point and every brand employs sales techniques like these, so whether they’re ethical or not isn’t even controversial anymore.

  These techniques work because people don’t usually know why they do what they do. Experts who monitor retail sales can figure out the reasons for behavior that shoppers themselves aren’t even aware of. Obviously, every retailer doesn’t have to be an anthropologist, but every executive who manages retail sales or sells retail products must definitely be observant and use the systematic information gleaned from these observations to grow their brand.

  20.

  Brand Is Imaginary Added Value

  Shoppers in every category have an array of choices today, including unbranded, generic products. But when people use a generic product, they only perceive the functional value of the product. Because there is no brand name, color, logo, emblem, slogan or unique visual symbol, they can’t perceive the critically important emotional and social dimensions of the brand.

  A skirt without a brand name label may not have much of an effect on women, but when this same skirt bears the name of the world’s most famous brand, these same women may swoon over it. Powerful brands like this put a more positive spin on the truth, adding value to products or services. As the famous advertising agency CEO Jacques Séguéla said, a brand is “an imaginary value” added to a product. This added value is meaning the brand creates in the human mind.

  All of the brands that compete in the same product category are in a contest to create this imaginary added value in the minds of customers.

  21.

  Humans Create Meaning While They Consume

  How is it that brands acquire meaning? Identity. People bring who they are and how they see themselves into everything they do and every decision they make.

  The society or family a person grows up in, the company they work for, the professional organizations they join, the teams they support and the groups they feel they belong to are all parts of their identity. People describe themselves through comparison with “the other” and identify themselves in relationship with “the other.” In societies like the United States, where individuality is extolled, people ask each other what their job is when they first meet, while in Eastern collective cultures, people ask each other where they’re from.

  Historically, identity was just as important. In agricultural societies, a person’s identity was determined by their family even before birth. The identities that people made for themselves through their own efforts were quite limited compared to people today.

  In the industrial age, on the other hand, ideologies determined what was right and proper. Being right-wing or left-wing offered people ready-made identities. A young person who adopted one of these two ideologies had a ready-to-use identity from day one, in which every detail had already been decided—from what they would wear and the books they would read to the places they would frequent and the music they would love.

  In the twenty-first century, even if people identify with an ideology, it’s no longer sufficient alone to give them an identity. Today, people have the freedom to be “both this and that” instead of “either this or that.” Now, people create patchwork identities that contain elements from diverse or different cultures. Even though religious and nationalistic concepts have been on the ascendancy in both the West and East in recent years, designing one’s own identity continues to be one of the most important items on individual agendas.

  It’s a complex endeavor, however. Identity is a multifaceted concept, and everyone has more than one. The number of identities a person has is equivalent to the number of religious, sectarian, ethnic, national, local, city, professional, political and social groups they belong to. People form relationships by emphasizing different identities based on whatever setting they find themselves in. In addition to the identities that people inherit from birth, they also acquire identities by marrying and starting a family, graduating from a school, gaining a profession, getting hired at a company, joining a club or participating in a political movement.

  Professor Aydın Uğur, a culture and communications expert based at Bilgi University in Istanbul, says, “This thing we call identity is like the Legos children play with. There are different parts: a wheel, a plain block, a propeller. Sometimes you use them to make a plane; sometimes you make a bridge. All of them are you. Each new model is still you. During the course of our lives, we travel to many different places and meet lots of different people, and we change our identities much like we use Legos.”

  This “identity construction” continues throughout our lifetime. People create an identity based not only on elements of religion, nationality, language and social class, but also on the products and brands they use. The meaning created by a brand through its products and advertising is transferred to the people who use it. Consumption is not just the act of consuming; it’s a symbol-laden psychological and social process. When people use a product category (such as a natural soap or a sports car), they send a message about their identity to their social circle.

  Knowing that people use items to signal their identities, brands seek to bring “imaginary value” to their products and services with the perceptions they create and their brand recognition. If they didn’t do this, they would be like commodities that make no promise other than functionality, focusing only on price. The key difference between a brand and a commodity is the meaning derived from the recognition and perception that a brand creates in the minds of people. Because of this meaning, use of one brand makes a person look like an adventurer, while another brand demonstrates eco-friendliness and another makes the user seem elite.

  Multiple options coexist because competition doesn’t allow any brand to have a monopoly on meaning (imaginary added value). The competition tries to prevent any single brand from controlling people’s choices by creating imaginary added value that will have a similar effect. For example, if Nike uses athletes as role models or sports heroes, Adidas claims the same meaning by implementing its motto “impossible is nothing” through advertising. As I’ll explain later (in chapters 34 and 52), brands in the same category will have similar meanings as a result of this process.

  Rival brands are never alone in the race to create meaning. But, as French sociologist Jean Baudrillard says, regardless of which brand they choose, people create meaning through the act o
f consumption. (For more on Baudrillard, see Dr. Victoria M. Grace in References.)

  22.

  Brand Value Estimation Is a Marketing Myth

  If brands are created in the mind, how can brand value be measured? Theoretically, it’s possible to express the intangible value (imaginary added value) created by a brand in monetary terms. When a brand has, over many years, become part of people’s lives through its products and services, creating a positive perception and recognition in the minds of people with its advertising, obviously all of these efforts result in monetary value. After all, this is why companies in every country occasionally sell their brands and convert this value to cash.

  But who determines this value? Currently, a number of outside, neutral companies do the work of assessing brand value. Some of the most famous international brand valuation companies include Interbrand, Brand Finance and Millward Brown. They not only assess brand values at the request of their customers, but every year they release a statement of the monetary value of the biggest brands in different countries.

  However, some experts, such as Mark Ritson in his 2015 article on brand valuation, have noticed inconsistencies in the valuations made by the world’s largest valuation companies. The estimates made by these three companies for the same brands in the same year can be radically different. For example, in 2015, Interbrand valued Apple, the world’s most valuable brand, at $170 billion, while Brand Finance’s valuation was $128 billion and Millward Brown’s was $247 billion. The difference between the highest and lowest valuation for Apple was $119 billion, which is practically, as Ritson says, the equivalent of a small country’s gross domestic product. Similarly, in 2015, Interbrand valued Coca-Cola at $78 billion, with Brand Finance saying $36 billion dollars and Millward Brown saying $84 billion dollars. The difference between the lowest and highest Coca-Cola valuations in the same year exceeded 100%. (I would highlight that the figures in question aren’t millions but billions of dollars.)

  Both the concrete numbers and the rankings of the values assigned by these three valuation companies are inconsistent. For example, a brand that’s ranked fifth in one company’s valuation may be ranked twelfth by another valuation company in the same year. If the numerical values alone were the only difference, we might attribute this inconsistency to a systematic deviation between the two companies and still benefit from the calculations they’ve made; however, there is no consistency in the rankings either. Yet none of these three valuation companies provides a satisfying explanation for why the values they assign to brands are different and why their methodology is different from that of their competitors.

  In 2015, a valuation company called Markables published a study in which they compared the sale prices of more than 160 brands with the estimated values of these same brands as determined by Interbrand, Brand Finance and Millward Brown in the same year. Of the three companies, Millward Brown had the best estimates, in which brand valuations most closely matched the brand’s price on the market. The estimates it had made for thirteen companies had an average deviation of 98%. The estimates that Interbrand had made for twenty-two companies had an average deviation of 196%, and Brand Finance’s estimates for 127 companies had an average deviation of 323%.

  Brand value obviously has a monetary equivalent. In practice it emerges at the end of the negotiation process while a company is selling its brand to another company. Hundreds and even thousands of brands change hands every year in every country.

  However, as of today, the methodologies and techniques of these international brand valuation companies are inaccurate. Thus, the idea of readily available brand valuations is a marketing myth with no true equivalent in real life. The brand valuation lists we see in news stories on the economy are essentially tabloid news.

  MARKETING LAWS

  Understanding people and their relationship with brands is the first stage of marketing. Next, marketers need a methodology to make their brands grow. In this next part, we’ll look at the faulty assumptions underpinning traditional marketing, and why scientific marketing and its ten marketing laws, introduced by Byron Sharp and the Ehrenberg-Bass Institute, provide a clearer understanding of how brands grow.

  23.

  Assumptions of Traditional Marketing

  Almost all marketing professionals believe in two “big” ideas. The first is that brands should differentiate themselves from their competitors so they can become preferred, and the second is that loyal customers are the main driver of a brand’s growth.

  Many people are inclined to accept certain ideas as soon as they hear them. I confess I accepted these two ideas without question as soon as I heard them when I was a university student. I never researched whether these two propositions were true because they were put forward by famous marketing professors. I continued my work as a marketing professional and remained faithful to the ideas I had accepted . . . until I read the evidence-based generalizations of the Ehrenberg-Bass Institute and learned the laws of marketing. At that stage, my ideas changed drastically. But before I discuss Sharp’s laws of marketing, I want to talk about differentiation and loyalty—the origins of these ideas and why they are insufficient to describe the real-world challenges facing brands today.

  Economists Edward Chamberlin and Joan Robinson were the first to advance the idea of differentiation in the 1930s. In books that they wrote independently of each other, the authors claimed that if a brand managed to differentiate itself from the competition, it would build a wall between itself and its competitors. Behind the protection of this wall, it would improve its profitability by selling at higher prices, much like a monopoly.

  This idea is theoretically true. If a brand has a feature that none of its competitors has, it will, of course, make huge profits, much like a true monopoly.

  But in real life, no brand can maintain such a position, except for the temporary advantages it may achieve for short periods of time. Competition prevents this from happening. The best way for a company to protect itself from competition is to innovate and maintain these innovations. (Every company should constantly work toward innovation; however, that discussion is outside the scope of this book.) However, even innovation can’t protect companies from the pressure of competition indefinitely. Even international pharmaceutical companies that protect the new medicines they’ve developed with patents can’t maintain their position of advantage. Before long, to gain a share of the market, rivals will release generic versions of these medicines at more affordable prices.

  Chamberlin and Robinson’s theory of differentiation influenced business thinking tremendously. However, the differentiation discussed in marketing circles is less about differentiation through products or services, and more about differentiation of a brand through brand perception. Most marketers believe that in a competitive environment where the products and services are similar, brands can differentiate from the competition through perception.

  The most famous marketing theory of differentiation is the “Positioning Theory” developed in the early 1970s by well-known marketing consultants Al Ries and Jack Trout. (After I read the books by Ries and Trout, I, too, believed that brands could be differentiated from their competitors using a smart positioning strategy, and could thus protect their advantages. For many years, I was an apologist for these authors.) Positioning Theory suggests that a brand can have a special position in people’s minds, and that it can be differentiated from rival brands based on this position.

  Ries and Trout suggested eight strategies for achieving this advantage. Today, most marketers accept these strategies as valid and adopt one of the eight: 1. Leadership; 2. Being first; 3. Product feature (e.g., Dove—moisturizing); 4. Cultural legacy (e.g., Design—Italy); 5. Market expertise; 6. Preference by a group of users; 7. How the product is made (magic ingredients); or 8. Being the last to market. For example, according to the authors, the fact that Carrier positions itself as the “inventor of air conditioning”
(being first) is enough to convince people to purchase its products. Similarly, Colgate’s positioning as “the choice of dentists” (preference by a group of users), is a persuasive winning strategy.

  Unfortunately, these positioning strategies, which I also recommended to my customers at one time, are inadequate to ensure the success of a brand. Obviously, there is nothing wrong with a brand adopting a slogan for itself, but it is impossible for a slogan or positioning alone to sell a brand. Ries and Trout never mentioned what other conditions were required for a brand to sell and grow.

  But there are other conditions. For marketing to be successful, a brand must do a lot of things right at the same time. In a competitive environment, even brands that achieve radical innovation can’t maintain their differences for long. For instance, in the mobile phone market, neither Samsung nor Apple can enjoy for long the new technological improvements they offer to their customers. It’s impossible for a brand to position itself and create differentiation to protect itself from the competition. Contrary to the positioning myth created by the marketing establishment, brand differentiation is not something we observe in real life (details about why, and what we do observe, in chapters 37, 38, 39, 40, and 41).

  The second fundamental tenet of the marketing establishment’s approach is that customer loyalty will grow a brand. In fact, one of the first things that marketers learn is STP, namely to segment the total market (S), target one of these segments (T), and position the brand for this target (P). Most marketers assume that if they can just position (P) their brands in the minds of the total market’s heavy users (T), making them loyal will be sufficient to achieve brand growth. However, in real life, growing a brand in a market by choosing a narrow target audience, like heavy users, and reaching high sales volume is something no company has ever been able to achieve (details about why in chapters 42, 43, 44, and 45).