There is Nothing New in Marketing Except Catch Phrases

Marketing is about segmentation and targeting there is nothing more to it. Segmentation is recognizing that different people buy different products for different reasons and  finding those reasons, occasions, usage scenarios and hence what the customer is willing to pay for. Targeting is delivering versions that meets those reasons and customer’s willingness to pay. I started a new series of articles on what I called “Fidelity Trap“. As I said in the introductory post, this is  concept I based off of the concept of Fidelity, Convenience and trade-off  as used by author Kevin Maney in his book Trade-Off: Why Some Things Catch On, and Others Don’t and on the concept of congruence and traps used in a different context by  professor and author Henry Chesbrough (I did one course with him while at Haas School of Business).

If you take Maney’s book, the core of it is not new or groundbreaking – somethings catch on and others fail when the marketer fails to fully understand their segments and/or fail to target them with the right versions. By definition, products fail in the market place because of marketing failure. What Maney’s framework of  Fidelity and Convenience does is to  frame and group together different reasons, occasions and usage scenarios of the customers.

What about the Traps meme ? It is just another framework or my hope for getting a catchphrase. Traps result when a firm’s marketing strategy is inwardly focused, ignoring market evolution, or due to differences in customer’s stated preferences and behaviors.

In the Trade-off continuum, it is oversimplification to say Fidelity and Convenience are the only two factors involved in customer decision making. It should also be noted that customer utilities from these factors are functions of other variables independent variables. For the analytically inclined there are methods and tools like conjoint analysis that allow the marketer to find how much customers value the different features (be it a fidelity feature or a convenience feature), all other factors  and how to define versions and at what prices.

There is absolutely nothing new in marketing – only restatements, new mental shortcuts and of course catchphrases.

 

The Long and the Short of Fidelity and Convenience Traps

In introducing the concept of Fidelity and Convenience Traps, I wrote that traps are where a firm is stuck in when its strategy and innovation are aligned with one factor while the market as a whole prefers another. These traps are a result of relatively stable preference (stable over a longer period of time)  of large segments of the market for fidelity or convenience while the firm’s resources are committed to and tied up with convenience or fidelity.

I also hypothesized that the market’s needs switch between  fidelity and convenience over time. This is not a high frequency switch that happens over a very short period time. The switch happens over a relatively long period of time (1 to few years) and in between switches there is a stability. It is the stickiness of the preference and the slowness of change that cause the traps.

These long run trade-offs are much different from the short run trade-offs we make everyday. These short-run trade-offs do not result in traps. Take for example eating pizza. It is a Friday evening, you and your family of four are considering dinner options. Your children decided it is going to be pizza. On a 0 to 100 scale, rate each of the following options (0 – extremely undesirable, 100 – extremely desirable)

1. Pizza  delivery from local pizza chain for $25, delivered in 30 minutes
2. Two frozen pizzas at $5 a piece, that you already have in your freezer, add fresh toppings of your choice. Total time 30 minutes.
3. Make pizza from scratch, with all fresh ingredients including fresh buffalo milk mozzarella for a total cost of $12. Total time 2.5 hours.
4. Head out to a highly rated pizza place that serves authentic Italian thin crust pizza in a wood fried oven with all fresh ingredients. Total price $55 and drive time 30 minutes, waiting time 30 minutes.
5. Head out to local all you can eat pizza buffet place with all standard pizzas made with packaged and frozen ingredients. Total price $28 and drive time 5 minutes with no wait time

You can see that high quality ingredients and  special oven make the pizza very high quality – or high fidelity. A frozen pizza or a delivered pizza are not the highest quality but provide great convenience. There is also the price – that pushes people to til either towards the fidelity or convenience end of the pizza spectrum. The score people assign to these options is referred to as its totality utility. Different people get different utilities from the same option and even for the same person the utilities for a given option will vary with context. The choices are not stable, highly unpredictable and vary over short time periods (even within a week).

In other words different segments of the market, at different times (within a short time frame) switch between fidelity and convenience.  This is the short run cycle and does not represent a stable preference by a large part of the market over a relatively long period of time and hence there are no traps.

Short run cycles do not cause traps, only the long run cycles do.

In the coming weeks, I will write more on modeling the short run and long run cycles.