Marketing Psychology 101

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If you went to college, you were formally introduced to Psychology, if you didn’t, you probably learned quite a bit about it in the school of hard knocks. Keeping it simple, psychology is the study of how humans interact and behave. That behavior is predicated on several factors but boils down to what motivates them and what doesn’t. There are a myriad of things that can influence someone’s actions and behavior. I will focus on just a couple of these as it relates to branding and marketing.

Halo Effect

The first notion is called the “halo effect” and has to do with biases the observer has to the subject or speaker. This means that you instinctively “like” some people and, therefore, rate them better than people for which you do not have the same affinity. As you might imagine, this is vital in presenting a product or idea to a prospective buyer or group of users. The more they like the presenter, the better the chances of accepting the product or idea.

Hawthorn Effect

The second idea has to do with how to capture the attention of your prospective customer. There was a study done in the 1920s and dubbed the “Hawthorn effect” where Western Electric was trying to determine how the effect of lighting could affect the productivity of production workers. Because there were observers constantly making notes, the worker’s productivity shot up, regardless of the illumination levels. When the observers were not present, after the study, productivity sank to new lows. Paying attention to the subjects makes a difference in what they will do and think about what you are trying to convey.

The Hawthorne effect (also referred to as the observer effect) is a type of reactivity in which individuals modify or improve an aspect of their behavior in response to their awareness of being observed. The original research at the Hawthorne Works in Cicero Illinois on lighting changes and work structure changes such as working hours and break times were originally interpreted by Elton Mayo and others to mean that paying attention to overall worker needs would improve productivity. Later interpretations such as that done by Landsberger suggested that the novelty of being research subjects and the increased attention from such could lead to temporary increases in workers’ productivity. This interpretation was dubbed “the Hawthorne effect.” *Wikipedia

Appeal

One of the more interesting basic premises of marketing and appealing to people is “how things look.” Are they aesthetically appealing, or not?

Numerous authors have provided lots of advice on how to approach people and convince them to go with your ideas, from Dale Carnegie (How to win friends and influence people) to Zig Zigler (See you at the top). Most of them focus on being mindful of pleasing people and not confronting them on your differences which has a lot to do with psychology and a people-friendly approach.

Integrity and Moral Values

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Finally, since it seems to have lost its appeal, I want to put in a good word for integrity and moral values. Those are easy terms to roll off the tongue, but not so easy to practice. Being patient with people and staying away from the temptation to be dishonest or misleading is an art on which many of us need brushing up. Too often people say what is expedient at the moment. It is human nature to avoid responsibility when something goes wrong or is done incorrectly. All the customer support folks have mastered the apologies and remorseful tones when called upon to respond to the mistakes. This does not excuse the mistakes nor does it change the behavior that all too often, caused them.

It takes quite a bit of effort to build customer loyalty and customer satisfaction, sometimes several years of diligent work. It takes just a couple of mistakes to undo all the good work that went before. Just ask Volkswagen, Enron, 3 Mile Island, Chernobyl, British Petroleum, Merck, Ford Motor Company/Firestone, Aventis, Toyota, Union Carbide, Exxon and many, many others.

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Solving Problems Thinking Outside the Box

Thinking outside the box isn’t as unique as you might assume. All sorts of people do things all the time, that are outside the normal limits they are supposed to follow. That’s a shame, but what’s worse is they don’t apply their ability to think outside the box to solve problems. That’s the rare version of outside the box thinking.

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I can recall two specific times thinking outside the box enabled me to achieve results beyond anyone’s expectations. The first occurred in 1981 when one of the software authors I worked with at Digital Marketing, invented a box that would run business software on an Atari game computer. A group of us wanted to manufacture the box and sell it to Atari owners and broaden our distribution of business software by roughly 20,000 users. Everyone loved the idea including Dave Gangola who had constructed the gizmo in his garage.

Thinking outside the box, I suggested we contact Don Kingsborough who was, at the time, responsible for Atari’s marketing.  Kingsborough also introduced a talking teddy bear named Teddy Ruxpin and built a giant marketing firm around it. Everyone liked the idea and we proceeded to contact Atari to setup10170-Atari-800 a meeting to discuss our proposal. In this process, we found out that Atari was attempting to construct the very same device Dave had invented all by himself and the project was code-named “Sweet Pea.”

In exchange for $250,000, and with the help of Peter Moss, who had come to us from Charles Schwab, Bob Baker and I met with Atari several times and negotiated a contract to provide the schematic design, manufacturing rights for 20,000 units, and 5 prototypes in time for the Comdex trade show in Chicago that year. I met Nolan Bushnell and Alan Alda, who was Atari’s official spokesman.

We were higher than a kite that winter but ran into a bit of reality when the low-end of the computer market fell apart. We spun off two companies, Add-On Computers and Add-On Software with the proceeds from Atari but our trip on cloud 9 was short-lived. Nonetheless, outside the box thinking produced a giant leap from thinking we would manufacture these boxes ourselves and try to sell them one at a time.

The second outside the box thinking, had to do with saving lots of money in inventory when I worked for Al Pease at Independent Business Systems in Livermore, California. IBS was a manufacturer of multi-user computer systems, which came in two basic flavors. One ran a proprietary  operating system based on UCSD Pascal, and the other on a niche operating system called Turbo-DOS. Both flavors came in a variety of configurations based on the size of the hard drive(s) requiring the stocking of multiple hard drives for all the supported configurations. One day, it occurred to me that by using a variety of hard disk controllers, we could use fewer hard drives and supply the same configurations in our price list. Al told me, “You earned your paycheck this month,” when I shared my bright idea. The reduction in inventory was significant and gave us the feeling we were fleet of foot, when it came to computer manufacturing.

How Much Should You Budget for Advertising?

This is a common concern of all businesses who are trying to generate and increase sales. I have seen so many people who throw money at this problem without having a clue what the outcome would be.

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When I was in business school, we had a guest lecturer who was the retiring CEO of the Bank of America and I asked him the same question. He said 2% of gross sales and that’s what I might expect a conservative businessman to say.

For starters, I always say, “It depends.” The situation varies from business to business and from market to market and depends on the competition as well as several other factors. I’ve watched too many small businesses go under because they had no budget at all. They spent advertising money based on their gut feelings. If you would like to avoid that outcome, I recommend the article at the end of this story by Roy H. Williams, for a great example of exactly what you can afford. And that’s the message here, you should not spend more than you can afford. Just like your budget at home, you must take more in than you send out.

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Having a plan and stated goals will make it easier to create your budget. Budgets for advertising and promotion usually are broken into different segments and are based on the kind of business and the greatest influencers of customers in your target market. If you absolutely have to come up with a number immediately, stick to the 2%. You will see, after reading the article at the end of this, that if you stick to 2%, chances are, you will not be spending too much.

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2% of a small number, isn’t very much, so that will certainly limit what you can spend it on. The better your system of capturing what caused your customers to buy, the less risk you will be taking. If you like to gamble, all bets are off.

Calculating you ad budget Ad Budget Calculation by Roy H. Williams

Typography 101

stock-graphicsI read an article the other day that claimed, “Everything you know about marketing, is dead.” I had to let that sink in and I do understand that things are changing all the time. I know marketing has changed with the advent of mobile devices and social media, but I thought I would resurrect some old rules and ideas and see if you think they’re dead.

Rules of Thumb

I always liked those rules that lead me to the promised land, even if they are rules I deliberately wanted to break and the people who believe everything I used to know about marketing is dead, are breaking them all, all the time. The first lesson I learned about design was about Typography. You know, the fonts and letter types used in everything we see.

Typography

For starters, I agree that typography got its start in the print business, specifically the newspaper business, and I will grant that newspapers, even printed books, are out of favor just now. The first rule I discovered is there are two types of fonts, serifed and sans-serif fonts. The serifed fonts have feet and embellishments while the sans-serifed do not. When using headlines and body copy, you should use either one for the headlines and the other for the body. Now I can imagine you are saying to yourself, “But he didn’t follow his rule here, his headlines are sans-serifed as well as his body. That is true, and one of the rules I have deliberately broken.

Style

Within the realm of typography, style is used to convey feeling, emotion, and tone. For example, a new, forward-thinking company would do well to use Avant Guard, a sans-serifed font to convey its modern approach to
business where traditional (dare I say old-fashioned) businesses might rely on a serifed font like Times Roman or Palatino to demonstrate their conservative reliable business style. This list is endless and offers designers infinite possibilities.

Link to an article on Typography by Robin Sentell

Marketing 101

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My first lessons in marketing came as the result of playing in a band. I was fortunate enough to play while I was still in high school and continued after I entered the Army in 1967. I played for about a year in a country band with my first experience playing at the Crystal Palace in Tombstone, Arizona. After that, I gravitated into a horn band made of members of the 36th Army band stationed with me, at Fort Huachuca, Arizona. We played quite a bit, usually on the weekends, and were very popular at the NCO, Enlisted Men’s, and Officer’s clubs. We also ventured out into the civilian community and played in Sierra Vista, Tucson, Bisbee, and other small venues throughout the area.

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When I got out of the Army and went back to school, I started my own band. We practiced almost every day and played at our share of local venues in Concord, California. This is where I really got my first lesson in marketing. Some of my bandmates were focused on creating original material. They wanted to write their own songs, get discovered, and sign a recording contract because that was their picture of “making it” in the music business. Having already enjoyed some small success, I just wanted to get opportunities to play and earn a little extra money. Since I was the leader of the band, I had to “market” the band whose name was Parts and Labor and find those opportunities to play for pay.

And the first lesson is this: “you can play what you want, or play what the people want, but if you want to get paid, you have to play what the people want.”

A couple of the younger band members were not happy with this, but they didn’t want to write off playing for pay, so we compromised a bit and did some original material also. That was my lesson in band management, making sure everybody got some satisfaction out of the results and bought into being a member of the group.

At every place we played, I was sensitive to what the owner and the crowd wanted to hear and did not want to hear. This sensitivity carried over to my own consulting business. You can generate the best darn marketing program in the world, but if your customer doesn’t like it, you lose. That is one of the reasons I always got charged up and excited when I presented the results to clients because I knew I had to “sell” them on the plan and the results would sell them on how effective it was.

Failing to Plan is Planning to Fail

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I enjoy planning and I’ve had lots of experience doing it. Planning with me started before I graduated from high school when I needed a plan for navigating the probability of being drafted to serve in a war in Viet Nam. Since I was not accepted by any of the colleges to which I applied, I had to contend with the draft board who, at that time, took every able-bodied male over the age of 18 and sent them into the U.S. Army. Sorting things out I found that volunteering for the service allowed me to choose either what my job or MOS would be, or where I would be stationed. I lived in Germany for 5 years and that was a tempting choice, but I decided to take the longest school I could find in a subject I thought would be interesting and that turned out to be 20 weeks studying meteorology, the weather.

This exercise taught me something important about planning which would stay with me throughout my work career. You will never account for every variable in a plan, and you will, however, discover some things you wouldn’t have if you did not plan. Planning for contingencies is just as important as planning itself. That’s how you avoid major errors and unacceptable outcomes.

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Fortune smiled on me when I met Bob Baker and he hired me in 1981 at Digital Marketing, a software publishing firm. Our premier product was Milestone, a PC project management software program. Milestone was also sold as VisaSchedule for the Apple computer. This program introduced me to the formal elements of a project plan and the charts and symbols used in professional project planning, the key ingredients of which are people or manpower, time, and money. These elements are balanced to save as much of each as possible and allow project managers to determine how long it will take, how many people in the effort and what it’s going to cost. Projects are broken down into tasks that have associated time and cost elements. They are presented together in a Gantt chart which indicates the milestones to achieving each section of the plan.

Later in my career when I worked at Computer Aided Management, I became familiar with ViewPoint another PC project management software package but this one was much more robust and expensive. Where Milestone had been a couple of hundred dollars, ViewPoint was $3,000 and came with a week of training ensuring customer’s success using it. This version of the project management planning tool focused a great deal on tracking the progress of the plan and was utilized by very large corporations like Pacific Bell, AT&T, and Hewlett-Packard to plan their projects. Our sales department spent many hours demonstrating ViewPoint’s capabilities and it was selected Editor’s Choice by PC Magazine twice.

A few years later, I found myself consulting with Digital Tools, who sold a software project management package called Autoplan which ran on minicomputers as well as PCs. And I had another client, Kidasa Software who published a software program called Milestones Etc. that produces Gantt charts quickly and easily. I participated in the production of PG&E’s internal manual on project management and have worked with several dedicated project management consulting firms.

Tunnels, Logos and Redundancy

tdy036I was the field support manager at Multisonics, Inc., in the mid-seventies when the company hired Donald E. Yost, a retired engineer/operations manager from Fairchild Semiconductor. Don was a colorful fellow and brought in to referee the fighting between our VP of engineering and VP of sales. Don conducted many informative meetings over a year and a half, among the staff at Multisonics, and I was privileged to attend many of them.

One day we were squabbling about some aspect of the development of our System 220  traffic control system, and he told us this story.

He said, “In the west,when we want to build a tunnel through a mountain, we get all the high-tech gear we can lay our hands on. We aim a laser at the mountain and start digging with the best earth moving and tunneling equipment in the world. After several months, we have a perfectly straight tunnel through the mountain, mission accomplished. In china, they have an abundance of people and not the best technology, so they do it differently. They get a large group of people on one side of the mountain, and another group on the other and they dig for months and months. If they meet in the middle, they have a tunnel, if they don’t, they have two.”

This sage advice remained with me and I have put it to use on several occasions. Once, I used it when I needed to change the logo of Computer Aided Management, the authors of ViewPoint, a PC-based project management software product. The change was necessary since the company’s logo consisted of three letters, CAM in a stenciled lettering font. Someone in the media at the time pointed out that it looked warlike and reminded them of Cambodia.

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The project to get a new logo was already underway through a design firm in Sausalito, California when I was hired at CAM. So I inherited their design effort but was not impressed with the way they treated me, their progress, or the design, so I proceeded to commission another design firm to produce a logo as well. The new company was very responsive, took the time necessary to dig into our business and our product, and produced a killer design using a symbol we used in the product. The first company’s effort looked like a poor rendition of a computer mouse, the second, like a 3-D brushed aluminum, very modern symbol, just what the company needed.


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This idea came to me again, when another client who was interested in having me produce a radio advertisement, asked, “What if I don’t like it?” I replied, “I will do two, and you can choose the one you want.” I went away, wrote the copy for the two ads, hired a celebrity impersonator, rented time in a recording studio and produced two ads. When I demonstrated the ads to the client he told me he liked them both, and so he paid for both of them.

How Big Organizations Solve Big Problems

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The other day I was comparing notes with my friend Hal Miller who recently left Verizon for greener pastures and he was describing how the company makes all the decisions for the sales teams. They move individuals around to different managers and assign customers to salespeople randomly, and it reminded me of two things.

One is the way very large organizations who survive over the years develop systemic problems. You’ve no doubt heard about the Veterans Administration or other government institutions who have problems getting much right, and the other is how HP handled that problem so it never became a systemic crisis.

Interestingly enough, change is the key, but random changes that interfere with a team’s chemistry is not a good way to go. At Hewlett-Packard, everyone has to change their position on the floor where they work. AbouHP1t every three years or so, we would be reorganized, but all we did was take everything we had and move as little as 3 feet north and 3 feet west. Lots of people were involved in making these move changes, and I noticed it did break up the monotony of our work. A big/little change like this is less disruptive to team chemistry, but it has the desired effect.

Extra large organizations try to fix problems through reorganization as well as change management. Too many of the policy changes forced on employees are tiresome, bothersome and don’t achieve the desired results. Moving departments from one office building to another can make enough of a change to get the employees engaged again. We all have management changes that happen because people are promoted or lost through attrition. That’s the only time we should have to adjust to a new manager. When we move to a new group or are promoted, we often find ourselves reporting to a new manager and that’s fine, and the way the system is supposed to work.