Marketing Guru Jack Trout & Tom H. C. Anderson – More Detail – Anderson Analytics Round Table Discussion V#1.2

Marketing Guru Jack Trout & Tom H. C. Anderson – More Detail
[Anderson Analytics Marketing Guru Round Table Discussion V#1.2]

 

Last week we received a few follow up emails and calls about the roundtable discussion with Jack Trout. The piece was a summary of a couple calls and emails Tom and Jack exchanged on marketing and consumer insights . However most of the content came from the call below. We decided to post a rough but more detailed transcript since so many seem interested. For those who prefer to listen, the audio is available here. Hope you will find it useful.

 

Tom H. C. Anderson: Hi Jack.

 

Jack Trout: Hello Tom

 

Tom H. C. Anderson: Warmer in Florida I hope?

 

Jack Trout: Yes, It’s spectacular in Florida right now.

 

Tom H. C. Anderson: It hasn’t been so bad here in CT either

 

Jack Trout: I know that, I know that, its 70 degrees today.

 

Tom H. C. Anderson: Yeah.

 

Jack Trout: Sun is shining.

 

Tom H. C. Anderson: So, as I mentioned we’re launching a new web site and a blog called Gaining the Information Advantage and we’re doing interviews a few thought leaders from time to time and we may be sending complementary copies of some of the books to our clients as well, and thought it would be great to have some insights from you.

 

Tom H. C. Anderson: What role has the Market Research/Consumer Insights function helped understand the battleground that you’ve been talking about in your books?

 

Jack Trout: Well, I say that from my point of view, the role that to me makes sense, from my point of view, which 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 sense of that perception, in other words, who owns what idea is really what it comes down to. I’ve always felt that’s very useful.

 

I’ve also just updated Differentiate or Die, which is a very popular book. In that particular revision, I came across a very interesting piece of research done by Brand Keys which is a very good research company in NY. They had developed some research on commoditization. What has happened 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 because that research pointed out the fact that most categories are headed towards commoditization, which then means that marketing is a mess out there. Fundamentally that is the problem that exists out there today. If your assignment is to differentiate your product, make it more attractive than your competitor’s 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. That’s a sum total of my view of constructive research.

 

Tom H. C. Anderson: What specific companies, if any, do you think have done a better job versus doing a bad/worse job?

 

Jack Trout Well, I would say in the automotive category that’s starting with the ones that all have differentiated themselves very affectively, 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’d 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.

 

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. And then you have the brightening crowd which have moved in there, and Paste, which was good for Aim, which it sort of lost it. 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.

 

Tom H. C. Anderson: Right, and how about in terms of segmentation? How does that play into the branding?

 

Jack Trout: I think segmentation is or essentially tells you …In other words…Let’s just think of Volvo, if you’re going to be selling the concept of safety, the segment that that would appeal to would be more of your family oriented segment. Not necessarily your hot shot of warmth and drive fast.

 

So, in other words, so as you’re working through a marketing problem, the broadest attribute tends to cover both segments, for example, cavity prevention of teeth, that’s going to pick up almost everybody.

 

But if you’re after for example breath protection, Close Up, or Whitening, Ultra-Bright, or one of the cosmetics I think, well then you’re after people, the younger segments essentially more concerned about what their mouths looks like, if they are out there dating so that’s going to be more of that segment. 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 a 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. But then you have to have a product that lines up against that piece.

 

So that’s really the concept, I mean the van, the family, the mini van. I mean that’s always about a family, that’s why they have all these multiple television sets and what not, so you’re appealing to that crowd. So you know that to me is segmentation (As to 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 segmentation?

 

Jack Trout: What does that mean, one to one segmentation?

 

Tom H. C. Anderson: Well, it’s an idea that many including Peppers and Rogers has written a lot about.

 

Jack Trout: Oh OK, one to one marketing…

 

Tom H. C. Anderson: Right

 

Jack Trout: And essentially yes, that’s 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. Cause it’s more costly to get new ones. Positioning and strategy are about attracting new customers. One on one marketing is about hanging on to the existing customer base. So generally, it requires using some element of technology and what not. 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.

 

Tom H. C. Anderson: And then I have some questions about the marketing research function, thinking about a profession like marketing research. For those of the readers who are in corporate America, Fortune 500 companies, maybe they are the new SVP of marketing research, do you have any tips for a new head of research at are Fortune 500 company and how they should position themselves within the company?

 

Jack Trout: Well, my tip for them is essentially, they should be as I’ve said earlier; they should become the measurer and qualifier of perceptions. 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 what you do 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. And the other side of the coin is that I’d be very careful about developing research to figure out what people want. Going into peoples’ mind and figuring out what they want. People tend to not know what they want. And the other side of the coin, do you remember what Mark Twain once said about this, he said “you can’t get the truth out of people until they’re dead and dead a long time”. In other words, if you’re out there trying to you know, find out what people are going to do and then doing a whole bunch of stuff, based on that, guess what? You know, you could be wrong; because people are not telling you the truth. People might tell you 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.

 

You can put certain measure of perception, you know, but once you get into that mystical, “what do you want”…? 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 the truth, and they weren’t talking to the right people. So that is, or there was a last minute sympathy vote, who knows. You’ve got to be careful about research.

 

Tom H. C. Anderson: I mentioned KPO [analytics off-shoring] last time we spoke and how a lot of companies, obviously this goes beyond marketing research. At the basic level it’s call centers being outsourced, but the new thing is Knowledge Process Outsourcing where in our field anyway 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 you’re conducting…somebody in India is conducting research in the United States. I just….It doesn’t make a lot of sense to me unless it’s really basic stuff. But you’re in a different culture, granted people just asking questions, but you know, 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.

 

Tom H. C. Anderson: Is there any information that you think marketers need to consider more which they are currently are not getting enough information on the marketing research could help with, you mentioned that…

 

Jack Trout: Yeah, I think differentiation! You saw that article I wrote, I sent you a copy of, it’s going to run in AdAge. Based on your, what are marketing guys doing, what are the key concepts they are working on? Well, when I saw that in the research you [Anderson Analytics] did, that in the top 10 concepts, differentiation wasn’t there, I said what are these guys thinking about? That’s their number one assignment. That is the problem, and if research can help in this process of figuring out differentiation and how well you’re doing, well that’s enormous there, that gets back to that brand keyes research.

 

If you see this category sliding into commodity country, and you say to your managers, guess what folks, we’re all becoming commodities here and that’s all going to be about price, you like that? Now you have something you’re contributing to the equation. And now, the market research people, according to the fact that this category is not being well differentiated or we are not differentiating ourselves well. That is a red flag that I think has enormous impact on management to think about. That’s where you can make a big contribution.

 

Tom H. C. Anderson: And you’ve written a lot about the explosion of the choice and how it’s creating a more difficult and conscientious environment.

 

Jack Trout: Oh, yeah, more and more products, yeah.

 

Tom H. C. Anderson: How do you think the internet has affected choice and the marketing battleground?

 

Jack Trout: Well it opens up, it’s supplies more information about different products, so in other words, I think it reinforces the concept of choice. I mean, you can go online and get more information about a category, what’s out there, and anything that generates more information is, gives you, and reintroduces more players into the category. To me what the internet does is it also gives you more and more information about the category. You can go on and research all kinds of things. So if you’re into that stuff, I think it reinforces the concept of choice. It also adds the complexity. Oh, God.

 

Tom H. C. Anderson: So is there any advice you could give to marketers in terms of leveraging the internet strategically to help solve their brands or products?

 

Jack Trout: (Sigh) Yes, I would say that consider the internet a tool, a new tool to reach people. We used to have in the old days, when I was young all we had was radio, newspapers, magazines and outdoor. Alright, and then we had television, and then we had cable television, and more and more direct mail became the factor, and even though that’s been around a long time. And now suddenly we have the internet as a way of reaching people and gathering information. So you have to view it as a tool, you know, are there now communities, are there now groups of people that I can reach with my message? But it gets tricky because in essence what you have to understand is that you have a basic strategy for a product. Let’s just talk about, you know, the “drivability” idea of BMW. Now I can go online and I can introduce some online stuff that captures drivability they did some with these little mini movies about driving, so in other words, in a way, you have to take your concept, and say alright now, how can I take that concept of drivability and move it on to the internet as a new tool, as a new way of reaching people? So, same idea same strategy, but you know developing in a, using a new tool which delivers the information. Maybe I can find which deliveries, all kinds of new things. So it’s just another tool. It’s not the replacement of all the other means of communicating, it’s just another way to communicate.

 

Tom H. C. Anderson: Right, well so in this new information age with evermore products and services and information about them available, does marketing also needs to change? If so how? Obviously there is something that stays the same I guess…?

 

Jack Trout: Marketing at this moment, as I said earlier is a mess. In other words, we’re not differentiating products effectively, with the commodity; you’re seeing more and more products being commoditized. And in an essence, that’s not a good thing.

 

And on top of that you’re having, and what’s really makes it worse is the level of competition continues to grow. Competition coming from actually from all over the globe. So rise of competition is the need to do a much better job of separating yourself and differentiating yourself from your competitors. And it also points to the fact, and here’s a very big problem, top management has to be involved in this process. And it’s not a bunch of marketing guys and a bunch of marketing research guys running around like a bunch of chickens. No. You have to have top management involved in this whole process of ‘What are we going to do? What’s our strategy? How do we differentiate ourselves? How do we build a business model around that idea? How do we stay focus on that idea?’

 

Instead of…because if management doesn’t get involve, guess what happens? Wall Street peeps in, and Wall Street says ‘hey, you’ve got to get bigger, you’ve got to grow’. So next thing you know this pressure to un-focus a brand; make it, try to be everything for everybody. You know, that’s when the financial people get in to the game. And that undermines a product, it undermines a brand and what it stands for as it tries to become everything for everybody because it has to get bigger. So there’s a lot of problems out there. And I think that’s really the issue. Cause trust me, it is a mess!

 

I mean, you talk about numbers and slicing and dicing and you read these endless parade of books that are coming out, which you’ve seen. This kind of marketing, that kind of marketing, emotion, we’ve got to have emotion, we’ve got to have love. I mean, what is going on here???

 

Tom H. C. Anderson: What about the idea of, there’s been a book written on Leading Through Analytics, and companies like IBM, Accenture, Harrahs, etc. played a part, and I mean, the concept of gaining an information advantage before your competition. Do you think that’s import?

 

Jack Trout: Well look, yes and no. In other words, if they’re telling me I can have a clearer sense of what’s happing in the market place, if I can have a clearer sense of what my competition is doing and what’s working and what isn’t working out there. This is just, it’s like knowing the enemy fundamentally it’s intelligence in the military terms, market intelligence.

 

So if I have more marketing intelligence just as it were, if I have more intelligence as to what’s happening with my enemy or in this case our competitors, sure, if that’s what you’re getting to. But be careful, let’s not generate too much information, or because in a way, unless you have somebody who can cut through it all, and say wait, no no wait a minute, we’re getting to, I think this is what this information is showing me.

My problem with too much information is people use it to push their own agendas. But you can find in research just about anything you want. Like that Bible, you want to read that, it’s a good, what do you want? I’ll find you something. And that’s the problem, see and so you have to be super careful with generating a lot of, too much information because people will use it sometimes just to further their own agendas. What they want to do. So it’s very tricky stuff.

 

Tom H. C. Anderson: Right, in terms of, which one of your books do feel is the most important to read first?

 

Jack Trout: At this moment in time, Differentiate or Die. In fact, I’ve just added a revision; it’s coming out in February. It’s an update of the first book, which was very popular. And in it I put in this new branch of research about commoditization creeping across category. That wasn’t in the first book. So I say that that is probably, this new book coming out is probably really well, even if you read the first one, is probably worth getting the second one. It’s got some new stuff in it that brings it update.

 

Tom H. C. Anderson: And, what sources, media sources, or authors of any did you look to in order to keep abreast or inspire yourself?

 

Jack Trout: I don’t really look at others; I don’t really read other guys stuff too much. I tend to stay focus on the market place and what’s happening out there. I don’t really want to get into; you know more and more theories. My sense is that, you know it’s funny, people ask me what I read; I’ll tell you what I read. I tell that I read Business Week, Forbes, Fortune, and the Wall Street Journal, and the Economist. I said those five magazines tell me what’s going on. I’m much more concerned about, I call those the score cards. I want to know who’s winning and who’s losing and why. So I’m much more into, I think I read that stuff and I don’t read other peoples books too much because it’s hard enough to keep up with what’s going on in the market place. And I think that is critical. You know, you’ve got to have a sense of who’s winning and who’s losing and why. So that’s where your lessons are.

 

Tom H. C. Anderson: Right so I guess, and you’ve obviously touched on this a bit, but what wisdom would you pass on to the next generations of marketers?

 

Jack Trout: In essence, and I’m writing a book on this right now. The best book in marketing I’ve ever read is a book, it was a pamphlet that was printed in the early 20’s… 1917 I think, something like that. And it’s all about; Obvious Adams is what it’s called. But what it talks about is in essence the search for the obvious. That is, that idea which was born 100 years ago practically is essentially the thing that’s missing today. All problems tend to be, you know, solutions are obvious.

 

You’re looking for the obvious; you’re not looking for complicating things, you’re not looking for cuteness, or whatever. You’re looking at the problem from the obvious point of view. You know, and I just wrote a column for my Forbes.com stuff and it’s, I wrote one on wither Starbucks. Now Starbucks is suddenly flattening out, it suddenly has competition from McDonalds, its putting in these fancy coffee machines, and you’ve got some Dunkin Doughnuts stuff going on down there as well.

 

So suddenly, Starbucks has to, in a way some just building endless store thing everybody will come. Suddenly, they’ve got to deal with competition which they never really had. So what’s their obvious solution? You don’t need a lot of research. Tell me, look they are selling $3 cups of coffee, and if McDonalds gets in with a cup of coffee, that you know pretty dam good or almost as good for considerably less money, they’ve got a problem. Because people will question, what am I getting? Is this all about machines?

 

So that’s the problem. Now, what’s the obvious answer? Is it, do you need a lot research? No. The obvious answer is basically, you should tell me about the differences in your coffee. Is there a coffee story you should be telling me? In the beans, in the process, whatever, that is a story I’ve never heard. You’ve never told me that story. Is that why? Now in essence, why am I spending so much for a cup of coffee??? Is there a quality? Is there something there? And I, that, they’ve been so busy building stores that they’ve never built perception about why there coffee is better. That is the problem they are facing now.

 

Now, did that take a lot of complicated research to figure that baby out? No. It’s obvious. (Both Laughing) It’s simple. That’s what marketing people have to get back to.

 

Tom H. C. Anderson: Alright. What was the name of that pamphlet; did you say “Obvious Adams”?

 

Jack Trout: Obvious Adams. It’s almost impossible to find, you know, I wrote a column on it in my Forbes.com some months ago. I put down how you get it in the end of the column. It’s a collectors item, I just happen to have a copy. (Both Laughing) It’s a classic. It’s a classic.

 

Tom H. C. Anderson: Do you know who wrote?

 

Jack Trout: Yes, a guy named Updegraff. You’ll never find it, so. And I’m writing a book on it. So this is all going to be reintroduced big time. (Both Laughing)

 

Tom H. C. Anderson: Only now the copyright has expired on that. (Laughing)

 

Jack Trout: Oh yeah, yeah, and it’s a family thing, there’s a lady, I think the daughter somebody is keeping it, and in the column I said do you want a copy of this thing, write to this lady. (Laughing) So you’ll have to go back to my Forbes.com column. They are all on the internet. And it’s in that list – And search for the Obvious is the title of the column.

 

Tom H. C. Anderson: Right, right. Well, I guess hum.

 

Jack Trout: I think we did it right?

 

Tom H. C. Anderson: Yeah, I think we are all set.

 

Jack Trout: I’m a naysayer about research. I’m not; I’m a great believer in simplicity, not complexity. I’m a great believer in the obvious, not the complex. Not the cute… And I think, so in a way I’m not the right, the first guy to talk, best guy to talk about when it comes to research. (Laughing)

 

Tom H. C. Anderson: Well it’s good to have differing points of view…

 

Jack Trout: I’m the other point of view. With me you have the opposite point of view.

 

Tom H. C. Anderson: Well, how can we convince you to, use more marketing research, I guess, naysayers like yourself?

 

Jack Trout: If you show me research about perceptions, like I showed you in, when I talked about in my new book The Brand Key Research about Commodity. That’s the kind of stuff I’m interested in. I don’t see a lot of that. You have to have a lot of people who, I see a lot of research out there that gets more and more complicated. Much more complicated. I mean, I’ve forgotten the name, but I wrote about this in one of my books about some company that’s got research, they are, they’re digging into peoples’ psyches, the researching people don’t know they have in their minds. I mean so deep. I mean it’s weird. I see more of that stuff floating around.

 

Tom H. C. Anderson: Well, one of the things we [Anderson Analytics] have 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. They use to be just video games and computers being discussed on the internet, but now you can find volymous data on anything from buying guitars to you know washing machines, etc., and opinions and customer ratings. We’ve been focusing on scraping that. We can scrape down over a hundred thousand posts by consumers who we know are heavy users of the product category.

 

Jack Trout: That’s good! What you’ve just described, it sounds to me as 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 minds, 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 would, JD Power went out and they researched ‘would you spend $.10 a for a copy?’ a plane paper copy and everybody said ‘no’. That they were getting a thermostat which was dirt cheap. So what people wanted, would you want this; and they all said ‘no’, and sometimes you say, what the hell, let’s just do it. And when saw it, they said oh this is terrific. That’s your problem, see. It was researched and they had hundreds of thousands of people in that research. And based on that research you would never have given birth to the plane paper copier, never.

 

I mean, because people said, ‘no, I’m never going to pay that kind of money’. I mean, it’s that problem you see. And so, that’s the tricky part about researching, you know lots of people. I want to know what’s in their minds already; I don’t necessarily want to have what they think they may or may not do.

 

Tom H. C. Anderson: But I guess, you would agree that gaining that idea what’s in peoples mind maybe before you create the strategy it would be important, maybe…

 

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 about this category, and 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.