How to unleash the power of context and turbo-charge your marketing

There are few more powerful insights you can generate than learning the main contexts in which demand for your product/product category arises. Having such knowledge will allow you to elevate your marketing and develop deeper, more profitable relationships with your customers.

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Step 1: identify the most frequent demand contexts
The first step in unleashing the power of context is to identify the different contexts in which demand for your product is triggered. Think of yourself as a detective attempting to answer the questions:

• Under what situations do people become interested in my product?
  
• What triggers their interest in my product? (Events, changing circumstances, etc.)
  

In sleuthing your way to an answer, you may find that there is a series of events that take place before demand is sparked. You will also likely learn that there are several distinct demand contexts for your product, some of which will occur with far greater frequency than others.

Your key objective in step 1 is to assemble a list of those demand contexts that account for at least 75%-80% of total demand for your product/product category.


Step 2: ask the 6 power-questions to elevate your marketing strategy
For each of the most frequently occurring demand contexts for your product, ask the below six questions:

1) How can I tweak or reconfigure my product to better meet the consumer need in the given context?

2) Are there complementary products or services I should consider offering, whether though my company or a partner?

3) How might I adjust my pricing to better reflect the value provided by my product within the given context?

4) How can I more effectively communicate & position the value provided by my product within the given context? Is there specific imagery, tonality & language I should use in my marketing communication?

5) Are there any changes I should make from a channel perspective, whether it be my channels for building awareness, for selling, or for servicing customers?

6) How can I detect when demand has been triggered for this given context? Can I actually identify these people with some degree of certainty? (Dig deep to answer this crucial question. There is almost always a way)
(Note that some of the questions may not be pertinent for certain product categories and demand contexts)


Let's make this pop! with a brief real-world example

Product du jour: Cars

Step 1: identify the most frequent demand contexts for cars
-The lease is expiring on the existing car
-The price of gasoline jumps and the person owns a gas-guzzler**
-The car is old & worn out (tail pipe tickling the pavement, etc.)
-The car died & resuscitating it would cost a whole lot of money
-The person is moving from the City to the ‘Burbs

Step 2: ask the 6 power-questions for each frequently-occurring demand context for cars
**Below I've answered the questions for the demand context in which the price of gasoline jumps and the person owns a gas-guzzler

1) How might we tweak our cars to better meet the needs of the owners of gas-guzzlers?
We could develop a fuel-efficient car or one that could run on cheaper types of fuel (given the long R&D cycle for new models, auto companies are always best suited to have such a model either always available for sale or one that can easily be ramped up for production)

2) Are there complementary products or services we should consider offering, whether though our company or a partner?
We could develop services or partnerships that would cheapen the price of gas - e.g., partner with credit card companies to develop attractive cash-back rewards on gasoline purchases

3) How might we adjust our pricing to better reflect the value that our cars provide to owners of gas-guzzlers?
Consumers who are feeling increasing pain at the gas pump are likely willing to pay more for a car that will significantly reduce their “gas pains”... Then again attempting consumer-level pricing can be tricky and a risky move from a brand perspective (not to mention the current distribution structure for cars does not readily lend itself to such a pricing strategy).

4) How can we more effectively communicate & position the value provided by our cars to owners of gas-guzzlers? Is there specific imagery, tonality & language we should use in our marketing communication?
We could position our cars as “fuel-smart” alternatives that could save them thousands of dollars, which could be put towards more enjoyable things than gasoline, such as a much-needed vacation in the Caribbean(!)

5) Are there any considerations we should make from a channel perspective, whether it be our channels for building awareness, selling, or servicing?
(Response not included to maintain brevity)

6) How can we detect when this demand trigger has been fired? Can we identify the owners of gas-guzzlers during a spike in gas prices?
Knowledge of rising gas prices is a layup - CNN & our local gas stations would make any major rise in gas prices abundantly clear. And, there are a number of ways to identify owners of “gas-guzzlers” with fairly good precision, starting with identifying the geographic distribution of SUV sales & SUV dealerships.


Your assignment
1) Select one of your products or services – especially one that you believe has the most “improvement potential” & could provide the most upside for your business.

2) With a pad & pen in hand, walk the product through Step #1. Also, ask colleagues and friends & family to complete Step #1. And, hold a brainstorming session if timing & calendars permit. (I’ve always found the collective IQ of a good group to be far greater than any one individual flying solo)

3) Take each of your top demand contexts and run through Step #2. For this step it is particularly valuable to hold a brainstorming session or two, as the collective brainpower of your colleagues in this step can be the difference between a $1mm idea and a $10mm idea.

4) Share your experience with us here on the blog, including any interesting things you learned from the process and, of course, any successes you have to-date.


A note on business strategy & demand context
In a future post I’ll be writing about the role that the demand contexts of your product should play in (re)designing your business strategy. Depending upon a number of factors including the economics of your business and the positioning of your brand, there are likely certain demand contexts that you would want to focus your efforts upon. More to come on this, so stay tuned...

And, as always, please feel free to leave a comment, question or shout-out.

Sources: car demand contexts based upon 2005 study by the American International Automobile Dealers (AIADA).

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Your pricing and marketing strategy should be influenced by your customer's reference point

We love to think of ourselves as rational, objective beings. And yet endless scientific studies indicate that we are anything but... context, the framing of information, and cues can have a profound influence upon how we view the world, and the decisions that we make...



Let's start with a fun warm-up exercise!
Real quick - what animal is displayed in the picture to the right?

(make a mental note of what you think and then scroll down for the answer)






















The answer is... drum roll please... there are two answers in fact. The picture is most certainly of a rabbit. But the picture is also of a duck. Can you see both of them?

For the majority of you who are seeing this optical illusion for the first time, I would guess that you saw a rabbit when you looked at the picture. Why? Thumper. The picture of Bambi's pal sitting at the top of this post alongside a carrot acted as a "cue", priming the "rabbit neurons" in your brain, and shaping your perception in the process. (Had I shown you a picture of Daffy Duck instead of Thumper, many of you would have seen a duck, not a rabbit. Sorry, Daffy.)



But what do "rabbit-ducks" have to do with marketing & pricing?
Simple. To be a successful marketer, it is critical that you develop an adeptness for identifying consumer contexts & reference points, as these factors strongly influence consumer perception, behavior, and price sensitivity. Of course, identification alone is not enough - you must use such insights as key inputs into your overall marketing strategy.

So to use a silly, "Thumpereqsue" example, if you know that people are bringing a "bunny-loving" lens to your restaurant because Bambi is playing at the movie theater next door, you might not want to offer wild rabbit as one of your dinner specials.


"Doug, can I interest you in tush warmers?"
Let's bring the concept of consumer context & reference points a little closer to home with an example that many of us can relate to: the old "car-options" strategy utilized successfully by thousands of car salespeople every day... it goes like this: if you're purchasing a big-ticket item (e.g., a new car, an expensive vacation, a new suit, etc.), you're more likely to also purchase lower-priced "options" or 'add-ons' than if you were offered these same items at a later date.

(hypothetical scene of me in a showroom purchasing a new car)
"Doug, how about we add those tush warmers to the car?... only $250 per seat... you know how chilly leather seats can get in New York during the winter..."

"Sounds good, Mr. Salesperson... what's an extra $500 when I'm already spending $XX,XXX on the car?"

Now instead imagine Mr. Salesperson offering me the same "warmers" for my new car 2 weeks after I've driven it off the lot. Even if he could have them installed without my having to lift a finger, I would likely balk at the offer.

"Thanks for the offer, Mr. Salesperson, but I think I'm all set. Love the new car, by the way. Thanks again for all your help"

Same tush warmers. Different context, different reference points, and different willingness to make a purchase.

In the first scenario I was in "open-wallet" mode. In the second scenario I was not. In the first scenario my reference point for the tush warmers was the several thousand dollar new car that I was in the process of buying. In the second scenario my reference point might have been an outrageous electric bill that I had paid only moments before the salesman made his offer.


Jelly belly's popcorn-flavored channel & pricing strategy
Jelly belly, a leader in the jellybean industry, provides us with a good example of a company that leveraged its knowledge of consumer reference points to develop a channel strategy that enabled it to charge premium prices for its jellybeans.

Instead of selling its jellybeans through traditional candy outlets, Jelly Belly made the conscious decision to sell them at specialty and gift stores, where sweets alternatives included higher-priced items such as gourmet chocolates and fruit baskets.

Since the reference points of people shopping at gift stores were these higher-priced sweets and not other jellybeans, Jelly Belly could price its 'beans at a substantial premium to other 'beans and still provide a cheaper sweets alternative for the gift-store shoppers.

Same jellybeans. Different context, different reference points, different price sensitivity.


How do I start applying these concepts?
Leveraging your insights around consumer context & reference points can turbo-charge the performance of your business by providing you with the means to significantly improve your marketing & pricing strategy.

The first step in this powerful process is to generate deep insights around your target customer's context & reference points. Below I have supplied some initial questions to get you started:

insights around customer context
What are the most common contexts in which your target customers [develop a need for | search for & learn about | compare & purchase | install | use & maintain | repurchase] your product or service?

-What do I mean by "context"? Context refers to those attributes that describe the environments of your target customers, such as: where they are - time & place. who they are they with. what they are doing. what is on their minds. their current objectives & goals. their current physiological & emotional states. get the idea?

insights around reference points
What reference points are your consumers using when they [search for & learn about | compare & purchase | use & maintain | repurchase] your service? How do these reference points impact: Their receptivity to your offering? Their openness to the price of your offering? Their experience when using your offering?

-What do I mean by "reference points"? Reference points are the points of comparison or anchors a consumer uses when assessing or experiencing your product. To use an extreme illustration, imagine two people who are given a used 2005 Toyota Corolla for free. One is a first-generation immigrant who earns $17,ooo a year, whose only mode of transport is a beat-up Yamaha motorbike. The other is a multi-millionaire who already owns 4 luxury cars. Given the two people's vastly different reference points for the free Toyota, their responses to the news about the free car will differ dramatically.

After generating insights around your target customers' contexts & reference points, you will want to explore how you can use these insights across critical aspects of your marketing strategy. In some cases how to leverage the insights will be obvious; in other cases you will have to stretch your thinking and percolate your creative juices.

In a future post I will run through some concrete examples so you can see these essential marketing concepts in action, and develop a greater understanding for how to use them in your business.

As always, I welcome your comments, thoughts, and questions.

Please feel free to email me if you have any questions about pricing and how to effectively use reference points within your business.






Related posts

• How to unleash the power of context and turbo-charge your marketing

• Product-sandwich product & pricing strategy

• Marketing & the 5 W's: why every marketer should take a journalism class

• CoNtEXT is King
  

Great books on pricing strategy

• The Strategy and Tactics of Pricing: A Guide to Growing More Profitably (4th Edition) (Pie)

Check out my favorite business books

read more

How your pricing and marketing strategy should be influenced by your customer's reference point

We love to think of ourselves as rational, objective beings. And yet endless scientific studies indicate that we are anything but... context, the framing of information, and cues can have a profound influence upon how we view the world, and the decisions that we make...



Let's start with a fun warm-up exercise!
Real quick - what animal is displayed in the picture to the right?

(make a mental note of what you think and then scroll down for the answer)






















The answer is... drum roll please... there are two answers in fact. The picture is most certainly of a rabbit. But the picture is also of a duck. Can you see both of them?

For the majority of you who are seeing this optical illusion for the first time, I would guess that you saw a rabbit when you looked at the picture. Why? Thumper. The picture of Bambi's pal sitting at the top of this post alongside a carrot acted as a "cue", priming the "rabbit neurons" in your brain, and shaping your perception in the process. (Had I shown you a picture of Daffy Duck instead of Thumper, many of you would have seen a duck, not a rabbit. Sorry, Daffy.)



But what do "rabbit-ducks" have to do with marketing & pricing?
Simple. To be a successful marketer, it is critical that you develop an adeptness for identifying consumer contexts & reference points, as these factors strongly influence consumer perception, behavior, and price sensitivity. Of course, identification alone is not enough - you must use such insights as key inputs into your overall marketing strategy.

So to use a silly, "Thumpereqsue" example, if you know that people are bringing a "bunny-loving" lens to your restaurant because Bambi is playing at the movie theater next door, you might not want to offer wild rabbit as one of your dinner specials.


"Doug, can I interest you in tush warmers?"
Let's bring the concept of consumer context & reference points a little closer to home with an example that many of us can relate to: the old "car-options" strategy utilized successfully by thousands of car salespeople every day... it goes like this: if you're purchasing a big-ticket item (e.g., a new car, an expensive vacation, a new suit, etc.), you're more likely to also purchase lower-priced "options" or 'add-ons' than if you were offered these same items at a later date.

(hypothetical scene of me in a showroom purchasing a new car)
"Doug, how about we add those tush warmers to the car?... only $250 per seat... you know how chilly leather seats can get in New York during the winter..."

"Sounds good, Mr. Salesperson... what's an extra $500 when I'm already spending $XX,XXX on the car?"

Now instead imagine Mr. Salesperson offering me the same "warmers" for my new car 2 weeks after I've driven it off the lot. Even if he could have them installed without my having to lift a finger, I would likely balk at the offer.

"Thanks for the offer, Mr. Salesperson, but I think I'm all set. Love the new car, by the way. Thanks again for all your help"

Same tush warmers. Different context, different reference points, and different willingness to make a purchase.

In the first scenario I was in "open-wallet" mode. In the second scenario I was not. In the first scenario my reference point for the tush warmers was the several thousand dollar new car that I was in the process of buying. In the second scenario my reference point might have been an outrageous electric bill that I had paid only moments before the salesman made his offer.


Jelly belly's popcorn-flavored channel & pricing strategy
Jelly belly, a leader in the jellybean industry, provides us with a good example of a company that leveraged its knowledge of consumer reference points to develop a channel strategy that enabled it to charge premium prices for its jellybeans.

Instead of selling its jellybeans through traditional candy outlets, Jelly Belly made the conscious decision to sell them at specialty and gift stores, where sweets alternatives included higher-priced items such as gourmet chocolates and fruit baskets.

Since the reference points of people shopping at gift stores were these higher-priced sweets and not other jellybeans, Jelly Belly could price its 'beans at a substantial premium to other 'beans and still provide a cheaper sweets alternative for the gift-store shoppers.

Same jellybeans. Different context, different reference points, different price sensitivity.


How do I start applying these concepts?
Leveraging your insights around consumer context & reference points can turbo-charge the performance of your business by providing you with the means to significantly improve your marketing & pricing strategy.

The first step in this powerful process is to generate deep insights around your target customer's context & reference points. Below I have supplied some initial questions to get you started:

insights around customer context
What are the most common contexts in which your target customers [develop a need for | search for & learn about | compare & purchase | install | use & maintain | repurchase] your product or service?

-What do I mean by "context"? Context refers to those attributes that describe the environments of your target customers, such as: where they are - time & place. who they are they with. what they are doing. what is on their minds. their current objectives & goals. their current physiological & emotional states. get the idea?

insights around reference points
What reference points are your consumers using when they [search for & learn about | compare & purchase | use & maintain | repurchase] your service? How do these reference points impact: Their receptivity to your offering? Their openness to the price of your offering? Their experience when using your offering?

-What do I mean by "reference points"? Reference points are the points of comparison or anchors a consumer uses when assessing or experiencing your product. To use an extreme illustration, imagine two people who are given a used 2005 Toyota Corolla for free. One is a first-generation immigrant who earns $17,ooo a year, whose only mode of transport is a beat-up Yamaha motorbike. The other is a multi-millionaire who already owns 4 luxury cars. Given the two people's vastly different reference points for the free Toyota, their responses to the news about the free car will differ dramatically.

After generating insights around your target customers' contexts & reference points, you will want to explore how you can use these insights across critical aspects of your marketing strategy. In some cases how to leverage the insights will be obvious; in other cases you will have to stretch your thinking and percolate your creative juices.

In a future post I will run through some concrete examples so you can see these essential marketing concepts in action, and develop a greater understanding for how to use them in your business.

As always, I welcome your comments, thoughts, and questions. 

Please feel free to email me if you have any questions about pricing and how to effectively use reference points within your business.






Related posts

• How to unleash the power of context and turbo-charge your marketing

• Product-sandwich product & pricing strategy

• Marketing & the 5 W's: why every marketer should take a journalism class

• CoNtEXT is King
  

Great books on pricing strategy

• The Strategy and Tactics of Pricing: A Guide to Growing More Profitably (4th Edition) (Pie)

read more

Marketing & the 5 W's: why every marketer should take a journalism class

Journalism 101. Who, what, when, where, why, how?... these key dimensions that are the foundation of journalism can also be used to design great marketing & segmentation strategies, and to turbo-charge your innovation efforts.

The 5 W's as they have been dubbed, can serve as a powerful tool for gaining deep insight into the contextual nature surrounding the need for and use of your product. I like to think of the 5W's as the marketing equivalent of an industrial-grade power shovel, allowing you to "dig deep" so you can get to those precious consumer gems that lay beneath your feet.

Context is king
Powering the 5W's is the essential notion that everything that we do is embedded in a context, and the better you, the marketer, understand the different contexts in which the need for/use of your product occurs, the better equipped you will be to develop marketing strategies or innovations that truly pop!

How do I use the 5 W's?
The simplest way to begin using the 5W's is to start with the most basic question and loop it through each W:

• {When/Where/Why/How/For whom} might the need for my product arise?

Spend at least 5-10 minutes on each W, making a list along the way. Allow your thoughts to percolate; don't be afraid to make assumptions - you can always validate them in the future. Do the exercise again a day or two later - often the most insightful thoughts will come after a period of incubation.

As you begin to use the 5W's, one thing that will become clear to you is that one or two of the Ws will often be more relevant to your product than others. You'll also notice that the Ws will frequently interact with each other in meaningful ways, and that you'll often want to drill down on a given insight using "follow-up" Ws. Note these interactions and drill-downs and allow them to generate further insight into the contextual nature of demand for your product. Often the deepest insights lay in these pockets.

Gatorade: a brief example of the 5 W's in action
Let's take Gatorade, that cold, refreshing beverage that most of us have purchased at some point in our lives. Reaching into our magic hat of W's, we come up with "Where?", leading us to ask, "Where might the need for Gatorade arise?"

Given that Gatorade is 'the ultimate thirst quencher', I begin to think of places where the need for thirst-quenching is likely to arise. A few examples that come to mind include basketball courts, hot climates (e.g., Phoenix, The Mojave Desert), marathons, and the Dead Sea.

Let's reach into the hat again... this time I pull out "When?", leading us to ask, "When might the need for Gatorade (thirst-quenching) arise?" Some initial thoughts that come to mind include summertime, playing sports, during a long hike, the morning following a night of drinking, a few hours after eating extremely salty food, and last but certainly not least, during a prolonged bout of diarrhea.

Let's now drill down on one of the "When's" - during a prolonged bout of diarrhea - and ask, "Where might such bouts occur?" One thought that comes to mind is certain poor villages around the globe where outbreaks occur regularly. Gatorade could be used in such places to quickly rehydrate people, especially children, who can die from the dehydration caused by the outbreak. Needless to say the potential benefits to Gatorade, the Gatorade brand, and the people of such villages would be numerous.

5 W's Recap
How to use the 5W's for developing marketing strategies & for business innovation likely merits an entire book; perhaps we'll put one together in the near future. Hopefully in this post I've given you a little taste of how one of the bedrocks of journalism can also serve as a potent tool for marketers & innovators alike. Much more to come.





More posts on the 5 W's:

• 5 Ws innovation framework
• Using the 5Ws to reduce customer churn
  

Check out my favorite business books

read more

Marketing & the 5 W's: why every marketer should take a journalism class

Journalism 101. Who, what, when, where, why, how?... these key dimensions that are the foundation of journalism can also be used to design great marketing & segmentation strategies, and to turbo-charge your innovation efforts.

The 5 W's as they have been dubbed, can serve as a powerful tool for gaining deep insight into the contextual nature surrounding the need for and use of your product. I like to think of the 5W's as the marketing equivalent of an industrial-grade power shovel, allowing you to "dig deep" so you can get to those precious consumer gems that lay beneath your feet.

Context is king
Powering the 5W's is the essential notion that everything that we do is embedded in a context, and the better you, the marketer, understand the different contexts in which the need for/use of your product occurs, the better equipped you will be to develop marketing strategies or innovations that truly pop!

How do I use the 5 W's?
The simplest way to begin using the 5W's is to start with the most basic question and loop it through each W:

• {When/Where/Why/How/For whom} might the need for my product arise?

Spend at least 5-10 minutes on each W, making a list along the way. Allow your thoughts to percolate; don't be afraid to make assumptions - you can always validate them in the future. Do the exercise again a day or two later - often the most insightful thoughts will come after a period of incubation.

As you begin to use the 5W's, one thing that will become clear to you is that one or two of the Ws will often be more relevant to your product than others. You'll also notice that the Ws will frequently interact with each other in meaningful ways, and that you'll often want to drill down on a given insight using "follow-up" Ws. Note these interactions and drill-downs and allow them to generate further insight into the contextual nature of demand for your product. Often the deepest insights lay in these pockets.

Gatorade: a brief example of the 5 W's in action
Let's take Gatorade, that cold, refreshing beverage that most of us have purchased at some point in our lives. Reaching into our magic hat of W's, we come up with "Where?", leading us to ask, "Where might the need for Gatorade arise?"

Given that Gatorade is 'the ultimate thirst quencher', I begin to think of places where the need for thirst-quenching is likely to arise. A few examples that come to mind include basketball courts, hot climates (e.g., Phoenix, The Mojave Desert), marathons, and the Dead Sea.

Let's reach into the hat again... this time I pull out "When?", leading us to ask, "When might the need for Gatorade (thirst-quenching) arise?" Some initial thoughts that come to mind include summertime, playing sports, during a long hike, the morning following a night of drinking, a few hours after eating extremely salty food, and last but certainly not least, during a prolonged bout of diarrhea.

Let's now drill down on one of the "When's" - during a prolonged bout of diarrhea - and ask, "Where might such bouts occur?" One thought that comes to mind is certain poor villages around the globe where outbreaks occur regularly. Gatorade could be used in such places to quickly rehydrate people, especially children, who can die from the dehydration caused by the outbreak. Needless to say the potential benefits to Gatorade, the Gatorade brand, and the people of such villages would be numerous.

5 W's Recap
How to use the 5W's for developing marketing strategies & for business innovation likely merits an entire book; perhaps we'll put one together in the near future. Hopefully in this post I've given you a little taste of how one of the bedrocks of journalism can also serve as a potent tool for marketers & innovators alike. Much more to come.




More posts on the 5 W's:

• 5 Ws innovation framework
• Using the 5Ws to reduce customer churn
  

read more

CoNtEXT iS KiNg

All good marketing requires a rich understanding of context - environmental and personal.

We are always embedded in a context. The time of day; the weather; the people we are with or not with; our location - at home, at the doctor, in a store, at work; our present goals, objectives and activities; our current emotional states & energy levels... to name only a few dimensions...

When I am standing on a packed subway platform during my Monday morning commute to work, with coffee in my left hand and organizer in my right hand, I'm in an entirely different context than when I'm in upstate New York in the fall, walking through the woods with my lovely wife & our charming French Bulldog.

While I remain "Doug" in both situations, my environment and my state of mind could not be more different. While my values, beliefs & views of the world might remain relatively fixed in both situations, my needs, objectives, mental filters, and basic physiology likely diverge greatly.

In a nutshell, good marketing requires a deep, rich understanding of context. People's needs, objectives & mental filters are dramatically influenced & shaped by their environments. Given this basic tenet, marketers need to align their strategies with the environments in which their target (and existing) customers find themselves.

To give a basic example, if your main customer acquisition channel is direct snail mail, you need to develop your mailer with an understanding of the context/environment in which your mailers are likely to be viewed.

While research can help you identify the most common contexts in which people open up their mail, for the sake of this example let's say assume it's in the evening just after coming home from work. Let's also assume that people look through their mail in one sitting, and thus will view your mailer as part of quickly sifting through a stack of other mail, most of which will be quickly identified as "junk mail". Let's take our premise one step further and assume that the process of sifting through mail is a frustrating one as people try to "separate the wheat from the chaff".

So that's the context you need to keep in mind as you develop your mailer. All of the decisions that you make about the mailer (envelope, copy, design, cadence, pieces, sizes & shapes, colors, etc.) should be made keeping in mind this context, which should heavily influence your decisions.

to be continued...

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