Marketing Guru Jack Trout and Tom H. C. Anderson Discuss Marketing Research and Brand Differentiation
In an effort to bring together multiple perspectives and innovations in market research, Anderson Analytics has started an ongoing “round-table discussion” series. The first of the series is an interview with Jack Trout. Trout has been a pioneer in market theory, making significant contributions to positioning theory and market warfare theory. He is a columnist for Forbes.com and is the author of numerous books, including “Jack Trout on Strategy” and “Positioning: The Battle for Your Mind.”
In a conversation with Anderson Analytics’ Founder and Managing Partner Tom H. C. Anderson, Jack discusses several important issues and trends in market research, including Text Analytics, Segmentation, Knowledge Process Outsourcing (KPO), and Differentiation versus Commoditization.
Much of Trout’s theoretical foundation shares similar ground with text analytics in that both operate on the basis that consumer mentality, including potential consumers’ perceptions and attitudes, is central to any strategy or research effort.
The below is a summary of the discussion:
Jack Trout: My point of view has always been the fact that very simply all marketing takes place in the mind of your prospect. It’s where the battle is and any research that develops, to me, gives me a sense of the perception that exists in the mind of a customer about a given product or a category of products and the assurance of that perception. In other words, who owns what idea is really what it comes down to…
In this regard, Trout agrees with Anderson in much of market research’s aims should be to use techniques that will delve into customers’ perceptions to understand how people view a brand product or service as different or similar to other available choices.
Jack Trout: What had happens in terms of categories, in terms of brands? How much are they perceived as being different versus how much are they perceived as being commodities, again, back to strength of perceptions about a given product or category. I find that very very useful… If your assignment is to differentiate your product, make it more attractive than your competitors’ products, and suddenly, you look at a large intensive bank of research that says that your category is heading into commodity country; you are not doing your job.
Tom H. C. Anderson: Can you give us an example of a company that used perceptions and attitudes to effectively differentiate themselves from everyone else?
Jack Trout: Well, I would say in the automotive category that’s starting with the ones that all have differentiated themselves very effectively, I would say that you are looking at of course BMW the ultimate driving machine, the drive ability, you’re looking at Volvo it has done a reasonable job with safety, although they haven’t been as consistent with that as they should be. I think Toyota with the concept of reliability, that perception has been very very powerful. I think Mercedes’ is engineering, in terms of that attribute and perception. Of course Ferrari is all about speed. And I say that that’s the highlight of the category, once you get away from those brands, you find a lot of GMs’ cars, and a lot of Fords’ cars and Chrysler’s cars are not well differentiated. And I think that’s part of the problem. You know. In the land of toothpaste, you obviously see well differentiated, you know, Crest with cavity prevention for a number of years, Colgate also in that category, now Colgate with the perception of not only cavity prevention but tartar control and the germ killing. So they kind of own three ideas. So in other words, what you’re after is owning something, owning a concept. Now is making that the essence of what the product is about, that’s the point of difference.
Anderson and Trout discuss how segmentation can be used to a) understand the effectiveness of branding; and b) re-formulate strategies to increase differentiation.
Tom H. C. Anderson: Well, it seems that segmentation can help choose a concept to pursue or own, right?
Jack Trout: Let’s just think of Volvo, if you’re going to be selling the concept of safety, the segment that you would appeal to would be more of your family oriented segment. Not necessarily your hot shot that wants to drive fast. So certain things line up with certain segments, but you can get nutty over trying to break this market place into too many pieces and I think what you find out is that the leading products tend to cover most of the market because they own the biggest attribute. And after you get by that, you’re going to have to find a niche or segment of the market that perhaps you can appeal to, it’s not as big as the overall market, but at least it’s a piece. So that to me is what I think is segmentation: what is the best group or segment that this product is going to appeal to.
Tom H. C. Anderson: What do you think about the idea of one-to-one marketing?
Jack Trout: It is essentially very powerful. Well let me tell you where people get confused. One-to-one marketing is about customer retention. It’s hanging on to your customers. You see, it’s a lot more efficient to hang on to your customers than it is to generate more; you know have to constantly generate new ones, which is more costly. Positioning and strategy are about attracting new customers. One-to-one marketing is about hanging on to the existing customer base. It’s all about keeping in touch with your customer base. So I see that as a terrific follow on to attracting customers. It’s a two-part problem. You part one attract them, and then part two hang on to them.
In advising marketing research executives in strategizing within their company, Trout provides some insight while also reiterating one of the fundamental challenges of market research.
Tom H. C. Anderson: Do you have any tips for new heads of research within Fortune 500 companies on how they should position themselves within the company?
Jack Trout: Well, my tip for them is essentially they should become the measurer and qualifier of perception. What’s in people’s mind? But you can’t get too crazy with it. The biggest problem with marketing research is it gets too complicated. They have more variations especially with the internet and new numbers and they slice and they dice and I think if you’re not careful, you’re going to generate nothing but confusion. You’re going to generate too much information. It’s the more you have the less clarity you’re going to have. I’d be very careful about developing research to figure out what people want; going into peoples’ minds and figuring out what they want. People tend to not know what they want. Mark Twain once said “you can’t get the truth out of people until they’re dead and dead a long time”. People tell you might what they think you might want to hear or people might say to you what they think, they’re going say what they think will make them look smarter or good, so truth is an elusive commodity. So you’ve got to be very careful with research that is aimed at trying to find out what people think or want, very careful about that. Look at the recent New Hampshire primary. They went in there and said, ‘wow looks like Obama’s going to win’, well guess what? You know, a lot of people weren’t telling him the truth, or, they weren’t talking to the right people. You’ve got to be careful about research.
Anderson and Trout also talked about KPO in terms of how other cultures may not be adept to conducting market research within the United States since cultural factors are inherently imbedded in what and how research is conducted.
Tom H. C. Anderson: I mentioned KPO last time we spoke and how a lot of companies’ call centers are being outsourced. A new thing off shoot to this is knowledge process outsourcing where, in our field anyway, everything from survey design, programming, and even actual analysis is done overseas to cut cost by a third, etc. Is this something that you have an opinion on? Do you think that’s a wise move to save cost and stay competitive or do you think…?
Jack Trout: Well, again it depends on the kind of research you’re doing. You know, can somebody in India research what’s happening in the United States? (Laughs) I mean, I don’t know, I tend to find it a weird idea that somebody in India is conducting research in the United States. It doesn’t make a lot of sense to me unless it’s really basic stuff. You’re in a different culture. Granted people are just asking questions, but I just don’t know. It’s a hard call for me to make, unless you show me exactly what they are trying to accomplish.
Anderson and Trout also discuss text analytics and how this approach might further strategy, branding, and competitiveness.
Tom H. C. Anderson: Jack, one of the things we’ve been doing is, text mining, and web/screen-scraping. Obviously a lot of people are giving their opinions freely on the internet, not just blogs, but discussion boards. There used to be just video games and computers being discussed on the internet, but now you can find at least one person providing statements on anything from buying guitars to washing machines to whatever. These statements also include opinions and customer ratings. We’ve been focusing on screen/web-scraping this data. We can scrape down a hundred thousand posts by consumers whom we know are heavy users of the product category.
Jack Trout: That’s good! What you’ve just described… it sounds to me to be quite useful, and why is it? Because what are you scraping up for me? Perceptions. You are, now the trouble is, you’ve got to scrape that all up and turn it into simpler stuff. Here’s what people perceive in this category. And now that to me sounds exceptionally valuable. Because what you’re telling me is what’s in people’s mind, and that is what I talk about when you start a program on anything, you have to find out what’s in people’s mind. Not what they want, but what’s in their minds already about a category or about products. Because you remember, there was a classic Xerox research where they [researchers] went out and they asked the question ‘would you spend $.10 a copy for a plain paper copy and everybody said ‘no’. That’s your problem, see. It was researched and they had hundreds of thousands of people in that research who said no, they would not pay .10 a copy. And based on that, you would never have seen the birth of the flying paper copier, never. And so, that’s the tricky part about research. I want to know what’s in their minds; I don’t necessarily want to know what they think they may or may not do.
Tom H. C. Anderson: So you agree that gaining information on what’s in peoples mind before you create a strategy would be very important?
Jack Trout: Absolutely, absolutely. You remember when I said at the very beginning, it’s the battle for the mind. So in a way, what you’re saying is I’m going to give you a clearer picture of the battlefield, what’s already there: in the mind and about this category. That would be very very helpful. That would be useful information, if you can try to distill it down and not let it get much too complicated.