In my last blog post I introduced the concept of the inverted bell curve. The ramifications of the inverted bell curve are many, but primarily focus on how it no longer pays to be “middle of the road.” In addition to cultural affects like the hollowing out of the middle class, the inverted bell curve impacts sales and marketing as well as product development. It is these areas I wish to discuss today.
Marketers and Manufacturers
So what are the ramifications of this significant paradigm shift for marketers and manufacturers? While there are not many, each is extremely significant in its own way. First off, the mythical 80% audience simply no longer exists in most spaces. Between the proliferation of television channels, radio stations, videos games, internet content and time shifting devices like TiVo, there is simply no one place where you can message such a high percentage of your intended target. Which has led to the second ramification – marketers need to create multiple campaigns with multiple touch points in order to reach the same or similar audience. And you can’t just put your television ads on your website. You actually need to create different content with unique messages to reach these more siloed and stratified audiences.
One of the primary tenants of brands in the past, was the notion of channel parity – that a consumer experienced a largely identical brand message regardless of channel. This worked when you had an adressable audience of 80% in a handful of television stations, local newspapers and radio stations. In the inverted bell curve world, where we have such a stratification of media outlets, not to mention such a huge diversity of outlets thanks to the digital world and proliferation of cable TV, it is not longer realistic.
The maker of a new energy drink, for example, would not have the identical message on a Pinterest board that largely attracts busy mothers, as the message on a fitness website that appeals to male wannabe professional athletes.Then throw in channels for beverage industry insiders, sleep-deprived students and blue collar workers – all of whom have their media channels of choice. For consistency the same tag line (energy when you need it!) could be used, but not an identical message. A message tailored to each audience would lead to greater overall conversion and sales than a single message shoe-horned into such a variety of outlets with their respective diverse audiences. And in keeping with the core notions of the inverted bell curve, these messages should focus on either tail of the curve – cost or features, quality or price.
The impact of the inverted bell curve on product development is also significant. Many firms follow a ‘good-better-best’ approach to product development and placement. In the bell curve world, this approach worked well to feature a range of usually middling options to consumers. Often the difference between the three tiers wasn’t that dramatic. It could be mostly size and feature set. Basic brands with a tiered offering were frequently trying to push consumers to a specific product in their offering. Often the ‘good’ product was decent, but compared to the ‘better’ product maybe not really that great a deal, all things considered. Sometimes the ‘best’ product was truly that, but priced out of reach for most. Sometimes the ‘best’ offering seemed more aspirational than anything else. But this triad gave consumers a range of choices across price points for a specific product and brand.
In the inverted bell curve world, a specific brand is considered by consumers to be either a quality, prestige play or a low cost play. If the ‘good’ product is the low cost entrant and consumers view it that way, that brand will likely only attract consumers who shop price. As the best low cost option, consumers are usually reluctant to buy a higher-end product from a perceived low cost brand. This is why the Japanese auto makers created Acura and Lexus, because prestige-oriented consumers would not spend those dollars on a Toyota or Nissan or Honda. Similarly, brands that appeal to luxury and prestige oriented consumers typically have limited appeal to the price conscious.
Rething your Good-Better-Best Strategy
This should cause brands to rethink their good-better-best strategy. If a company wants to be a low cost producer, and sell based on volume, their ‘best’ offering should not be a luxury version of their product. They should stick to the left hand tail of the inverted bell curve and have all three offerings still be in the “price-sensitive/value’ category. Similarly, for a luxury brand, their entry level product should be in keeping with the firm’s luxury cache, and keep themselves firmly rooted in the right-hand tail of the inverted curve.
The ‘middle’ spells trouble for many manufacturers. People who shop price or who are not especially enthusiastic about the product or category are drawn to the value brands – they stick to the left hand tail of the curve. These folks tend to shop at Walmart, dollar stores and seek discounts from more middle of the road retailers. The enthusiasts are more likely to shop the right hand of the inverted bell curve (features, quality and durability), all of which come at a premium. This dichotomy leaves limited space for middle of the road products and brands. The value stores might not carry them or have a limited selection because their offerings might be beyond the means of the value shopper. The prestige outlets typically do not carry perceived lower-end brands because they lack the necessary cache and prestige for luxury shoppers. This leaves fewer clear options for more middling products and brands. For example, Sears used to be the place for these brands, solid and quality but not dirt cheap or overly pricey. But in the age of the inverted bell curve, they are losing ground daily.
So all this means that as companies begin a product development journey, it becomes imperative early on to decide on product placement. Brand perceptions should be a major element to this journey. Luxury brands will have a hard time attracting cost-conscious customers. Discount brands often struggle to attract the well-heeled. Better to know that going in and plan accordingly.
In a recent meeting I attended, a company presented a slide showing which of their competitors were expected to grow market share in the coming year. On the right side of the curve was the super-premium brand with an almost 80% likelihood of growth. On the left hand side was a warehouse club brand at 65%. No other brand showed even a 50% likelihood of growing market share in the coming year. Not the news those brands want to hear, let alone this company who was in the middle of the pack. In the old bell curve world, they would be situated just where they want to be. In this new inverted bell curve era, they are losing market share to the price conscious on the left and the feature rich, top quality brand on the right. The middle is not the place to be - fighting for the scraps.
Living in the era of the inverted bell curve means understanding that the mass market ideas of the past have progressed. Reaching an 80% audience with one campaign in one channel is unlikely, if not impossible. Offering middle of the road products for middle of road prices will not engender the type of customer loyalty and advocacy necessary to survive in today’s competitive marketplace.
Firms need a new strategy to succeed and excel in this new environment. Contact Macquarium and let us show you how to thrive in the era of the inverted bell curve.