Tuesday, June 27, 2017

The Anticipation of Emotion

The interplay of reason and emotion in the decision-making process is highly complex, and it’s largely acknowledged that it is not a matter of categorizing decisions as rational or emotional, but recognizing that both are engaged to some degree, and sorting out which might be leading the other in any given situation.

In this regard, a distinction must be made between the emotions that are influencing a decision during the decision-making process and the emotions that are rationally evaluated as a component of the outcome of the decision, and it is my sense that the latter are far more influential than the former – and that they are in fact the product of reasoning.

Generally speaking, decisions are made with the objective of having a net positive effect on the emotional status of the decision-maker: we choose a course of action because we believe the outcome will make us happier than an alternative course (including the choice not to take any action at all).  

Even when there is a veneer of practicality, it masks a core of emotionalism.   The stoic businessman chooses a course of action because it will be the most profitable may claim that he has set aside his emotions so that logic and mathematics can determine his course – but the desire to have the greatest profit is still essentially an emotional desire.   He expects to feel happier if he makes a large profit. And he does not wish to feel embarrassed or incompetent by choosing an option that yields less profit than another.  So it is feelings, not reasonings, that define his objective.

But even at that, one cannot say that the decision is emotional: the objective is emotional, though the decision-making process may be as devoid of emotion as he can possible make it.   But even the emotional objective has a rational basis – the decision-maker is not feeling the emotions that will arise when the outcome of the decision is realized at the time he is making the decision to act.   Instead, he is anticipating his emotional state – considering, in a very rational way, how he imagines that he will feel in a moment he has not yet experienced. 

To predict a reaction to a future event is not to feel, but to think about feeling.   To understand, in a very rational way, the causes of our emotional states and to assemble a logical model in which we can consider the possible effects of a given input that has not yet occurred.   This is not done while experiencing emotion (or the same emotion as we will in future), but it is done by anticipating emotion – and predictive models such as this are not emotional constructs, but rational ones.

So while we may say that even a seemingly rational decision is really an emotional one, we must also concede that even a seemingly emotional decision is really a rational one – and in the end, the false dilemma that any decision is purely one or the other misguides us into failing to recognize the degree to which each contributes to the decision-making process.

Tuesday, June 20, 2017

Hierarchy of Influence: Need, Action, Product, Brand

When approaching the task of influencing a prospect, a fundamental task that is often ignored is to assess the prospect’s status quo in terms of the level of persuasion that will be needed to convince them to purchase a specific brand.  To begin at the wrong level undermines the efficiency and effectiveness of the campaign, leading to various degrees of waste and failure.

This level of persuasion can be schematized as a hierarchy, in which the requirements of each level
must be met before the next level can be addressed:
  1. Need – The foundation of all other levels, the prospect must recognize that he has a need, and be motivated to address it
  2. Action – A prospect who wishes to satisfy a need must consider that a given course of action is necessary to do so.
  3. Product – A prospect who is committed to an action must identify a product requisite to the successful completion of the action.
  4. Brand – A prospect who recognizes his need for a product must select a brand of product to purchase

The task of influencing the prospect must be performed from the bottom (or the level at which he already exists) upward to the top: to attempt to convince a prospect of the value of a brand when he does not perceive the need to own the product is fruitless – no matter how good the brand, he does not desire the product.

The lower on the hierarchy, the more prospects exist. The many people who feel the same need may identify several different actions that they believe would be effective in serving that need – so there are fewer prospects with whom you can begin at the “action” level than the “need” level.  Those who feel that actions that do not require your brand are the best method of serving their need must not only be shown that your brand is effective, but that it is better than something that they are already convinced will serve the need.

The lower on the hierarchy, the more difficult the task of persuasion.  It is fairly simple to convince a prospect to try your brand if he already desires the very product you are trying to sell him – or said another way, he is already sold on the product (as well as the action and need) and just has to be convinced of the brand.    But to attempt to convince the same prospect that he needs to reconsider his plans and take an entirely different action is more difficult (as you must overcome his commitment) – and even if you can do that, you must then convince him of the need for the product and the need for the brand.

Tuesday, June 13, 2017

How Temporary Customers Kill Brands

A conversation about cuisine has got me thinking about brands that experience a brief surge in popularity that drives short-term revenue but do damage to the core customers and ultimately to the sustainability of the brand.  

The conversation was at a local culinary institute among a group of gourmands, who have a genuine interest in cuisine, as opposed to the “foodie” crowd who are disdained for having no palate and mindlessly following culinary fashion.   It’s the foodies who have made sriracha sauce so commonplace these days – it’s being slathered on hot dogs and cheesecake and many other things on which it does not belong, simply because it’s being mentioned in various media by celebrity “chefs” who have no real culinary credentials.

The most popular brand of sriracha is produced by Huy Fong Foods in California, which has been around for about forty years, and which originally produced small quantities of high-quality product for ethnic groceries and restaurants.   Because the foodies have taken to it, their product is in mass-market groceries, and the gourmands generally agreed that it has suffered significant loss of quality, and they are seeking other brands – small shops that produce the original high-quality product similar to what they used to get from Huy Fong.

From there, the conversation turned to sourcing of ingredients, but the question stuck in my mind: what are the long-term prospects for Huy Fong?   The present popularity of their product will not last, as the foodies will eventually turn their interest to some other ingredient, leaving the brand high and dry.   And because it diluted its quality to produce in such high quantities, its original customers will have left it for other suppliers.  In plainer terms, the brand has a sacrificed its long-term sustainability by abandoning its core market to pursue short-term profitability in the mass market.

There are tactics such a firm can use for recovery: to pursue other product lines that are more sustainable, to be prepared to scale back operations as demand wanes, and to attempt to predict the next foodie fad.   None of these seem promising or sustainable – it is merely prolonging the decline of the firm as it spends out its present surplus attempting to remain solvent once the mania has passed.

More troubling is the question of how a brand can sustain its core customers, those who have been loyal from the start and would remain loyal after the fashionistas have lost interest.  Fashion is, after all, an environmental factor over which a firm has no control and can only react: but can it react in the right way to sustain itself?

I suppose that time will tell, though my expectation is that within ten years, the Huy Fong company will collapse from having ramped up its operations to serve a temporary surge in popularity.   Even if it is able to scale back production facilities in a timely manner once the fad passes, it has already lost its core customers and will need to explore a different market – perhaps those who cling to a fashion once its heyday has passed, but even they have a limited lifespan.

And perhaps it is just the nature of things: there are very few quality brands that have sustained themselves for a century or longer.  It can be argued that the true luxury brands have shunned the mass market and abstained from the temptation to vulgarize themselves for easy money when threatened with popularity from the wrong kind of customer, but these tend to be very few.

Tuesday, June 6, 2017

Sowing Discontent

Marketers largely depend on the discontent of the public: it is only because a person is unhappy that the marketer finds an opportunity to offer him something that will make him happy, or at least dispel that particular cause of unhappiness – whether it is a problem that disrupts and otherwise happy status quo or an opportunity to elevate the status quo to a happier state.

It is in this respect that marketers are accused of creating “false needs,” though that is a general aspersion that assumes that all products serve no purpose.  This is not necessarily the case, and it is not usually the case: most products that have any sort of longevity provide a valid solution to a valid need, and those who make such accusations generally presume themselves to be qualified to asses what other people ought to have.

But in some instances, the accusation does seem to hold merit: the vast majority of goods sold in developed markets are not necessities that serve basic survival needs, but conveniences and luxuries that serve more abstract and psychological needs.   To say that a need is psychological rather than physical does not invalidate it, but merely relegates it to a class of need that most would agree is of less importance than physical survival needs.

A person who is completely content with their status quo is not a prospect with a great deal of potential.   They are not in a buying mood right now, and are not likely to be in a buying mood until they deplete their stock of some product that contributes to their contentment.   Their purchasing behavior is limited to restocking existing products, generally with existing brands, so long as they continue to be contented with the results.

So contentment is the state of being in which a man is free of all cares and does not feel compelled to do anything.  Unless something external causes conditions to change in an unsatisfactory manner, or unless he imagines conditions that would suit him better, he remains entirely inert.

And so it follows that only a discontented person is susceptible to marketing: his discontent is the motivational factor that generates with him an interest in taking some action to restore or achieve contentment – and where the action requires the consumption of a good or service, he is a prospective buyer of that good or service.

The discontented are easy targets for marketing – but discontentment is available in limited supply.   It is for that reason that marketers seek to sow discontentment – to present to otherwise contented individuals the prospect that they should not be so complacent about their current situation – or at the very least should feel discontent because there exists an opportunity to achieve greater contentment.   Whether this is ethical depends on the validity if the argument.

In the end, any commercial enterprise (or for that matter, nonprofits and governmental organizations) succeeds by providing a product that alleviates discontent – and where discontent does not exist, it must be created in order to the organization to have a purpose.