Your business plans have their own hierarchy of needs — levels that define your ability to predict success. Inspired by Maslow’s Hierarchy of Needs, you can start to identify opportunities, strengths and weaknesses by examining your own marketing plan as a pyramid.
In the second episode of our three-part podcast series, we detail the third and fourth levels — why they are often overlooked despite being the most important, and what you can do to bring some semblance of order to the unpredictability that these layers can be known for.
Level 3: Internal factors
Level 4: External factors
Listen here (Subscribe on iTunes, Stitcher, Google Play, Google Podcasts, Pocket Casts or your favorite podcast service. You can also ask Alexa or Siri to “play the Uncovering Aha! podcast.”):
Welcome to Callahan’s Uncovering Aha! podcast. We talk about a range of topics for marketing decision-makers, with a special focus on how to uncover insights in data to drive brand strategy and inspire creativity. Featuring Jan-Eric Anderson and Zack Pike.
Level 3: Internal factors
Jan-Eric:
Hi, I’m Jan-Eric Anderson, Chief Strategy Officer at Callahan.
Zack:
And I’m Zack Pike, head of data at Callahan.
Jan-Eric:
Today we’re going to talk about part three in our five part series. But, by way of a recap, before we get into that, I’ll go back and talk about the prior two.
The first in part one, we talked about the very base level, we call that delivery of activity. In summary, that is … it’s basically just looking at what media activity is happening and what impressions are being delivered on behalf of the brand. That media activity, it could be paid media, it could be owned media, it could be earned media, covering all types of channels. That’s really what that is, a basic media reporting of what ran.
The next layer up in our hierarchy of needs we discussed in part two, we labeled efficiency and optimization. That really gets to the quality of those impressions and how they can be made better. It is natural progression of the base level of just understanding what activity ran. It looks at the quality of the activity and starts to bring in advanced level KPIs. We start to understand how these impressions can be made better.
I should mention also, that in both of those layers, the assumption is that both of those are done in the context with an overlay of what business performance is. It’s not that there’s an expectation that we can make a causal relationship or correlated, but we start the foundation, we’re building a foundation to where we want to get to that, where we are able to understand how our marketing activities are improving business.
Base level was delivery of activity. In part two, we talked about the next layer up was efficiency and optimization. Which brings us to today, which is part three and we labeled part three in our Hierarchy of Needs for Marketing and Media Insights as Internal Factors.
Internal Factors is a bit of a pivot from where we’ve been on the other two layers. This is where it really starts to get interesting. This is still totally marketing but if you think about the four P’s in marketing, right? We’ve really talked about promotion at this point. We haven’t talked about the product itself, the quality of the product. We haven’t talked about the pricing. We haven’t talked about the availability or the distribution of that product.
Zack:
Right.
Jan-Eric:
How do you measure that?
Zack:
Yeah. This… It’s only number three on our list and it seems like this one gets forgotten all the time. We rarely walk into an environment with a new customer. In any of my prior lives where someone comes to me with all their marketing information, media, and stuff. Plus, “Here’s what happened with our price over the past three years and here’s how our customer satisfaction scores have changed.” That never happens. That’s what it is. Jan-Eric did a good job of outlining the kind of core buckets. But, if I’m marketing a crappy product, I need to know that, right? If the product has changed over time, that’s a really important context for me to understanding the value that my marketing is actually producing. When I get the question of, “Hey, how much did marketing get me last year?” You can’t just answer that with marketing metrics.
There’s all the stuff around perception of the product and the way customers are using it but we’ve seen a lot of correlation between price. Everybody knows that price is a big factor and volume. It’s basic economic relationship. As price rises, volume typically declines. Not in every case but on the whole, that’s what happens. If you don’t have that level of visibility… Sometimes it’s hard to get to, right? If you are in a big system where there’s more than one person controlling the price, it’s hard to get your head wrapped around that. It requires a pretty strong data infrastructure. It requires some strong visualization, techniques to really be able to see that up against your activity in the marketing space.
Jan-Eric:
We’ve all been in situations like that where we can think of situations that we’ve heard of. Where we’ve got a product that sells itself. Doesn’t need a lot of promotion versus something that needs a little bit more influence and persuading to get somebody to try something. That’s really the product piece of it. Is this something that’s easy to sell? If somebody tries it, are they hooked? Or, do they need to be convinced to continue to come back? Do we have legacy issues that we’re trying to overcome or bad reputation that we’re trying to overcome?
The pricing piece of it is really, really, really interesting about how that can impact business results. We worked in the food industry, the restaurant industry and we see that. They impact a pricing aleck and have on sales results, on business results in the short term but in the long term it can also have a different type of effect.
Zack:
Often times, that’s where it really matters because the long term pricing actions can offset short term promotions in a negative manner. The other thing… This is one we’ve been doing more and more often with our marketing clients is distribution. You mentioned distribution. Is my product out of stock in the stores that I’m selling it in? Right? How often is it out of stock? Which products are out of stock? When is it out of stock? When a product isn’t on the shelf, people can’t buy it. I’m sending impressions into a market and customers can’t buy the product, they’re probably buying the next best product on the shelf. It’s not like they’re just not buying it and coming back later. If you’ve got all this data wired in together, that insight is really clear.
Jan-Eric:
It starts to paint a much more complete picture of other factors influencing this. Which is kind of how these built upon each other. If you go back to recap kind of where we were, activity and delivery. The delivery of our activity and understand the quality of that delivery. Then, other factors impacting how that delivery is going to move business. You can have a very effective media plan as delivering on all of your optimization KPIs but your sales aren’t going up. But, when you realize it’s because you’re charging twice as much a year ago and you’re available in half the locations you were a year ago. All of a sudden, you start to think different about how hard your media plan’s really been working for you.
Zack:
That’s context that the marketing team needs, both in planning but also their internal meetings, right? You think about the questions a CMO gets and some of the pressure that’s in some organizations that’s placed on a CMO when things aren’t great, you have to have that context of the whole business to one, justify what’s happening but also to build a good plan around it. The plan for a system that is declining in distribution over time is going to be different than a plan that’s growing in distribution, right? I’m adding new points versus removing points. Those are two totally different marketing plans.Really, really important.
On the prior to, we also mentioned how hard it is to get your hands on some of this data. In level one and two, it’s pretty easy. It’s usually baked into what you’re doing. This one tends to be a little bit harder. If you don’t already have a data infrastructure in place, it’s going to be hard to get your pricing information loaded in and get your… Especially something like out of stock percentages and estimating the impact on sales of products being out of stock. Those calculations are extremely complex and they have to be super dynamic because they need to happen on a daily and weekly basis. That is the biggest hurdle with this one.
We solve it with our own intelligence platform and building the right relationships at the client with the right people to get our hands on that data. Depending on your position in the company, it can be difficult.
Jan-Eric:
Critical to have a solution like that in place. Ours are different thing and really important to have it, a platform, place like that can bring in these separate source of information to give a single view. That wraps up our third layer in part three of five of our Hierarchy of Needs for Marketing and Media Insights. We hope you’re enjoying the series so far. Please come back and join us as we continue to move our way up the chain.
Level 4: External factors
Jan-Eric:
So that brings us to our fourth layer, which we want to talk about today. And the fourth layer is labeled “External Factors.” So again, another pivot, where we were talking about the internal factors in layer three, this is external factors. These are things that are beyond a marketer’s control, but certainly elements that can impact a business. And I suppose that it would really vary. The external factors that are important to keep an eye on, would vary by business.
Zack:
Yeah. Absolutely. So at this point, you’ve got a good understanding of the business itself. Like all the things, all the data and factors that you have really good insight into, you understand. But no business works in a vacuum, so like all this stuff happening outside in the market, and with environmental factors, and with your customers and everything, can have sometimes even greater impact on the business than the stuff you actually control, right? You think about PR disasters, how those can just shove a business through the floor. That’s just one little thing that happens out there in the market, that sometimes you have either very little, or no, control over.
Jan-Eric:
And certainly need to understand, because it helps to, again, this is really about a hierarchy of needs for marketing and media insights. These are definitely factors that can impact business. So as you try to measure or understand why your business is slowing or speeding up, it’s good to understand these factors that you can’t always control, can’t always explain.
Zack:
Yeah. One that we use quite a bit is weather information. It’s kind of weird, because this is one that I see people using anecdotally. Like hey, we know in this area of the country, we had a really bad weather year, so we think that that’s a factor. But the data exists to use this at the same level you use all your sales data. So we subscribe to a feed from IBM, where we’ve got weather data for any location in the country, every hour of every day for the last, I don’t know how many years.
Jan-Eric:
Yeah. You’d be hard pressed to find anybody who would say that weather doesn’t impact their own personal life. So certainly, it impacts consumers. And many clients would say, “Weather impacts my business,” but fewer clients can really articulate or quantify how it is impacted.
Zack:
Yep. Yeah. I mean, think about walking into a board meeting talking about the success of the last marketing campaign and being able to confidently, with data, say, “Here was the actual impact on weather. We grew by 10%, but we had a much better weather year.” That brings a lot of confidence to anything that you’re saying now about marketing, because you’re looking at more pieces of the puzzle.
So weather is one that we find a lot of value in, especially on seasonal products, which tend to be lots of the things that we work on. But there’s a lot of stuff. So you think about competition. Every day, a new competitor seems to come into every industry. Some of them are really strong, and some of them are really weak. Depending on your position in that industry, you have to worry about those at varying levels. And I think it goes even past the typical media step of how much are my competitors spending in relation to me. I think it’s also what are the offers that they’re putting out there, compared to mine. Where are they, compared to me.
I remember when I first started in marketing, I was the marketing associate, (which is basically a fancy term for marketing assistant) early in my career. And I would go through magazines and score all of our competitors’ ads, because it was important to understand, okay, we’re buying x-amount of ad space in these 20 magazines. What are our competitors doing? Are they buying better ads than us, or worse ads than us? And we used that as a measure to say how good we were in relation to competition, because in that company, you didn’t have spend information for the competition.
So I think competition is one piece, but there is a host of data that the government actually makes available to us, as well. So another piece that we use is Bureau of Labor Statistics, the Census Bureau offers a lot of really good data, that can all inform what’s happening. If you think, on this podcast, we’ve talked a lot about the no store, or no point of distribution is created equal. Well, the data is available to validate that, and then help you understand, in relation to that individual store or location, what are the factors that could be impacting that place’s performance?
Jan-Eric:
Yeah. And competitive activity, or category activity, beyond just advertising, right? Product recalls, or ingredient recalls, or safety concerns, are all factors that kind of starts to bleed into cultural or timely incidents or events that are happening within our society, are all factors, again, that you can’t plan for, but are important to understand in the context of ultimately, what’s impacting the business.
Zack:
Right. You know, even companies offer data, too. Google actually makes a lot of their search data available at kind of a top-line summarized level. So if you’re working on a seasonal product launch, for example, you’re not quite sure where the season starts and stops in different areas of the country. Weather could influence that, but search activity of consumers is a really good proxy to problems that they’re having, or things that they’re interested in. That’s data that we use a lot, too, and it’s-
Jan-Eric:
And it … Sorry to cut you off. It’s probably worth noting here, as well, that a lot of this layer, there is inherent to this layer of reporting, there is a lot of discovery that’s required, and exploration that’s required. So a marketer may have some hypotheses. You need some hypotheses to go out and explore and to prove or disprove. And that becomes very valuable. Just go back to the very basic example of weather. I think that weather impacts my business. I’d like to get the right data in place to look at that. And then I’d do some analysis, and then I can start to understand how it does. So there will be a lot of trial and error within this, but it needs to start with some informed hypotheses about what we think are external factors that could be impacting our business, where is data available, going and getting it, and then being able to do some analysis to see, is this truly a factor impacting our business? Does it help us? Does it hurt us? Is it a neutral effect? And those become very valuable insights. So that’s an important thing to say. It’s not to say that everybody is going to find insight from weather, or that everybody is going to find insight from the Bureau of Labor and Statistics. It’s really about having some hypotheses, getting the relevant data, and being able to explore those hypotheses.
Zack:
Absolutely. And I think, on top of that is the infrastructure to be able to handle it. So we’ve kind of talked about, in this hierarchy of needs, as we’ve moved further up the chain, you’re also moving farther up the chain in the complexity of your technology necessary to process this data. So if you think about weather, there’s a lot of weather data. You need to pull that data for every location across the country. That can create a very large dataset. But the same for all of these other sources. Having the infrastructure in place to connect marketing, sales, and now all of these external, third party kind of factors, and be able to ask questions of those quickly, is critical at this stage. If you don’t have that, it’s going to be really, really difficult.
Jan-Eric:
Well, the key part of this fourth layer is really understanding the external factors beyond the things that we can control within our own devices. And that kind of paves the way, then, to our final segment, which will be in our next episode, as we work our way up our hierarchy of needs for marketing and media insights. Thanks for joining.