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Measuring Brand Promise and the Placebo Effect
One of the challenges marketing and PR people face when developing messaging strategies is in conveying messages to target audiences that bolster the value and perception of their product while maintaining consistency with the company’s core values and brand promise.
A few weeks ago I attended MIT’s CMO Summit where two examples of this problem were presented to the audience. The first was by Mark Colombo, VP Strategic Marketing, Fedex and the second presentation was by MIT Sloan School of Management Professor, Dan Ariely. Mark Columbo explored the challenges of maintaining a strong brand reputation and customer loyalty while driving growth. Professor Ariely, who researches behavioral economics, presented the compelling results of several studies that have been done on how marketing actions can effect consumer beliefs and perceptions. Both presenters recommended that marketers need to regularly test and measure marketing ideas and actions such as pricing and positioning to understand how they effect consumer beliefs and perceptions.
Mark Columbo pointed out that you need to "measure what you treasure", integrating customer behavior analysis with customer attitude analysis. Each company should ask themselves: Why are customers loyal and why do they leave? For a company the size of Fedex they also had to ask themselves, how can we grow an established business organically or through acquisition without diluting our brand and losing customers?
Fedex decided to follow a mixed growth approach while continually measuring the effectiveness of their brand promise of providing an outstanding experience every time a customer interacts with Fedex. They also measure the actual customer experience to see if it consistently meets the expectations of their brand promise. Because Fedex views every customer touchpoint through marketing, PR or direct interaction as an opportunity to fulfill their brand promise, they have done an excellent job of maintaining customer loyalty in a very competitive market. Mark's presentation is available at the MIT CMO Summit website.
In the second presentation, Professor Ariely explained the role of research in marketing and the power of context in influencing buyer behavior. Simple changes to marketing actions such as pricing and how products are displayed can have an enormous impact on the value consumers perceive of the product.
Professor Ariely has also done important research on the placebo effects of marketing actions. Most people are familiar with the effect placebo drugs can have on patient health. Many people claim to feel better or experience reduced health issues when they think they are taking a new drug even if it is simply a sugar pill. Professor Ariely tested the idea that pricing and messaging can have a similar placebo effect on consumers, however sometimes it can result in a negative response. In one of his research studies, he provided two sets of gym members with the same energy drink. One set was told that the drink cost $2.89. The second set was told that the drink cost $2.89 but was purchased by the University at bulk for $.89. The first group experienced much greater satisfaction with the product than the second group who thought they were drinking a discounted product.
Was the first group of participants influenced by the perception that the drink was more valuable because it cost more? Perhaps. If these participants had actually purchased the drink themselves would their perception of the value have changed? Maybe.
The point is that we should test out messaging, pricing, distribution channels and other marketing variables for different audiences before making assumptions about consumer response. Even though messaging appears to work well for one product or audience it may not have the same effect on a new audience. To learn more about this study and other areas of behavioral economics, visit Dan’s website where there are many interesting papers available.
I recommend reading the paper "Placebo Effects of Marketing Actions: Consumers May Get What they Pay For" published in the Journal of Marketing Research and authored by Baba Shiv, Ziv Carmon and Dan Ariely.
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