" EXPERIENCE
IS THE KEY FOR
DIFFERENTIATION"
Dr Bernd Schmitt

Strategic Marketing caught up with Dr Bernd Schmitt, brand consultant and celebrated author of such bestsellers as and “Experiential Marketing” and “Customer Experience Management”. In a candid conversation with Manoj Khatri, he discusses the changing customer preferences, its impact on marketing and branding and how Experiential Marketing can help create sustainable competitive advantage in such a situation.

Most marketing efforts are very product-centred with focus on functional features and benefits, which are also more or less product-oriented

What is the difference between customer experience management and traditional form of branding?
There are several key differences. The first one is of course that the customer is finally becoming the centre of all marketing and management efforts. Marketing as a discipline has always been customer-oriented. But frankly that has often been just a broad based philosophy or sometimes just a buzzword. In terms of following up or in terms of concepts and tools for actually putting the customer in charge, marketing has still emerged very little.
Most marketing efforts are very product-centred with focus on functional features and benefits, which are also more or less product-oriented. Marketing may even be focused on brand; but very rarely are products being developed out of an understanding of what customers really want. The customer is rarely considered in the new product development process. For that matter, the customer is hardly considered even for other marketing efforts; whether it is communications or packaging or designing websites.
What customer experience management (CEM) does is put the customer at the centre of the organisation.

Are you saying that the traditional branding exercise like creating awareness can be completely done away with in favour of CEM?
I have no problems with traditional branding exercises or with traditional marketing. I think it is important to do segmentation, targeting and positioning. It is important to understand the value of the brand; it is important to understand how a brand can create awareness, associations and so on. That’s all fine. Many marketers are already doing that. But this doesn’t provide you with any competitive advantage any more. It’s the basics of marketing. It’s the price of entry into the game. But if you want to differentiate yourself in a relevant way in the present times, you need to take the customer approach, over and above the traditional marketing efforts.
Traditional marketing efforts are a necessary but not a sufficient condition any more. I am criticising it not because it’s wrong but because it doesn’t go far enough.

Does the CEM approach complement the traditional approach of marketing?
Yes I think in many cases it does. But there are some cases where it supplements the traditional marketing process. For example, if your product offering has no functional features or benefits, like in luxury goods or services, the functional features and benefits are pretty much irrelevant. It’s all about the experience. It’s all about the creation of an image. So in such cases CEM doesn’t complement but supplements or sometimes even replaces it - especially where traditional marketing practitioners have a view that consumers are rational decision makers, and use research methods of traditional marketing which are very much focussed on the verbal understanding of customers, using surveys or traditional focus groups where you talk and talk and talk...in some cases this approach may be a disadvantage to the company as it leaves out the experience part. But most of the time, you’re right, CEM complements traditional marketing efforts.

Can you give an example of a product category where CEM can completely replace traditional marketing?
Luxury goods would be a good example. In many Fast Moving Consumer Goods, traditional marketing doesn’t go too far any longer, because many products are equivalent in terms of quality: they are the same, i.e. they have parity in terms of functional features and benefits. So if you are reiterating how great your product is, what functions it has, it doesn’t matter to consumers: they know and they can’t be fooled. They realise everything is the same. So now, what is not the same is usually the experience that is created for them - and that includes a certain sense of appeal in the way your product is packaged; it may include a certain feel approach that you have as part of marketing. It may include establishing meaningful relationships through certain differentiated services. There are many different ways of
doing that. In all these cases, experience is the key for
differentiation.
How does the CEM approach go beyond the emotional marketing tactics?
Experiential marketing is not just emotional branding. It’s not about smiling faces in advertising. Or putting up a retail store in which people feel good because it’s got such a wonderful atmosphere. CEM is about understanding the essence of the brand, and the essence of what customers want from that particular brand and then managing everything surrounding that. So it’s about understanding the lifestyle of customers. It’s about broadening your marketing view from the product to the consumption situation.
Let me give you an example. Customers do not buy shampoos or soaps in an isolated way from other products. The task that customers have to do is to clean themselves each morning. They have to clean themselves with a certain objective...e.g. they may have to go to work. Or to a business meeting. Or because they are meeting friends. But these days customers do not think “soap” or “shampoo” and so on. They think of pampering themselves, in terms of spa
services or sophisticated cleaning or even aroma therapy and such things. That’s the consumption situation. That’s
what we need to understand - how your product fits into that consumption situation and that’s what experiential marketing does.

CEM is about understanding the lifestyle of customers. It’s about broadening your marketing view from the product to the consumption situation

Can you give us a few examples of companies that have successfully adopted the CEM approach?
Sure. I think Volkswagen has done a tremendous job in the US with the launch of the new Beetle. The Beetle is not necessarily differentiated in terms of quality and functional features and benefits. It is a very good car in its category but so are many others. Yet, it commands a price premium, which is almost double compared to other cars in its category. So, why this price difference? I believe it has to do with the unusual shape, unusual colours, hip marketing and advertising; it has to do with little things like putting a flower vase in front of the car so that people are reminded of the hippy days. So I think that’s a great example of CEM.
I think another great recent example is Apple. Apple, as you know, was in a crisis in the mid-nineties. The stock was underperforming during the technology boom era in the US. But most recently they’ve done a tremendous job by launching certain products that are very relevant for customers, and they have communicated those features in an experiential way. There was an advertisement that said, “Collect all five” referring to the different colours that the new I-Mac was offering. They have introduced colour in the ugly, beige PC market. What they have also done is to introduce a screen that can be turned in all directions and the advertisement for this is totally visually driven. The benefit is illustrated in a visual, experiential way, not by saying, “You can turn the screen in any direction” and so on.
In services, there is a great example from this region. Singapore Airlines for many years has done a wonderful job. They have the same levels of service as many other airlines, but they have branded this experience beautifully in terms of in-flight service, in terms of pre and post check-in procedures and so on. They provide what I call the “EJ” experience. EJ stands for EXULTATE JUBILATE, which is a famous Mozart piece, which means “Exultant Jubilation.” And that’s how customers feel when they are being treated in a relevant and sensitive and empathetic way. And that differentiates the brand from all others.

How suitable is the CEM approach for a country like India where consumption patterns are vastly different from its western counterparts?
Yes there is no question that the Indian Market is really different in many ways from other markets. Price sensitivity is one of the issues. It has very different distribution channels. Retailing is also very different. But most experts in India agree that experience is the next step, even in this country. Over the next ten years or so, what you will see is more and more parity in product quality, making it difficult for marketers to differentiate purely on the basis of product. Service is already an important issue in this market, and I reckon that experience will be the next.
Service is a part of the experience. But experience also includes things like packaging, how the company website is designed and many other things. Take for instance, consumer packaged goods, service industry or technology products. Think about mobile phone, mobile phone operator services - they are already purely experiential products, especially if you are selling them to younger customers. And why only younger customers, even businessmen want products designed to suit their needs. All this is changing customer preferences. So, I really believe that CEM and experience marketing has a very bright future in this market.

Since India is very heterogeneous country, people here and their consumption patterns differ from one region to another. So how must one go about customising the CEM programme to suit the different regional preferences?
I agree that it is important to address the issue of localising the marketing appeal. Just as many times it is important to localise in the global market, it is important to localise within the broad based market like India to deal with
different preferences, cultural lifestyles and even different languages.
To do so we must keep certain things constant and customise other things. Basically the brand identity should be the same - name, visual appeal etc. But the way you do certain experiential outreach - whether it’s an event or promotional activities or even communications and advertising - there you may have to localise in order to relate to the customer more closely. How you do that, how you localise - well that’s how the experiential world of the customer comes in. It’s a tool, a part of the customer experience management training that I have used in many companies. We use it for different market segments and those segments could be different regions. The way it works is that you get a broad-based, in-depth understanding of how customers are living their lives. E.g. one of the research tools that uses part of the experiential world of customer, is called “funnelling.” You follow the customer around and understand the broad based consumption patterns, and how they are relevant for a particular product category or a particular brand. So you really start from the broad-based assessment - from the outside in. Many companies still go the other way round. They say “Here’s my product, here’s my brand and these are the product features and benefits, so what values are underlying in it?” This is called laddering up. I think that’s the wrong way to go about - I think you have to ladder down with the customer - and the experience he is looking for.

Just as many times it is important to localise in the global market, it is important to localise within the broad based market like India to deal with different preferences, cultural lifestyles and even different language.

 

Do you know of any companies that have used CEM in India?
A good Indian example is the McDowell’s Signature brand. I have looked at some of the recent McDowell’s Signature campaigns, in particular the “success icons” campaign where they bring in the user; they show real people and their achievements, their success. Then they relate these achievements to the brand, which, the ads say, is “The new sign of success”. So, rather than being purely product-focussed and showing just a bottle and some ice cubes in it, this campaign portrays the entire life of its customer.

What about McDonalds in India?
Good example. McDonalds does this all across the world. Clearly, their logo, brand identity and other things remain the same. But then the type of potatoes that you get, some of the product offerings, the events they organise, the restaurant design, or the way they address the children - all this varies from market to market. It’s different in China than it is in India, which is different from Germany or USA.
You have talked about internal experience, which you also call “employee experience”. Can you tell us how does that impact the overall marketing exercise?
Experiential marketing is often seen as working only on the external factors - improving the value that customers get from your product. But there has to be a similar consideration for the employee experience. In the service business, it is most obvious. But this also applies to other businesses. For example, I have been working with a pharmaceutical company called Eli Lilly - one of the best pharmaceutical companies that are around today; and their new brand promise says, “Answers that matter.” Now they have to deliver this promise. And that’s how the employees are important - because it is the employees that are delivering the “answers that matter” - to the doctors, nurses, patients, health organisations, insurance companies, government bodies and so on. They have to deliver the answer in whatever form it is necessary: face-to-face, over the telephone, through faxes or emails. If they do it the wrong way, it can be very detrimental to the company and they could even end up in court. So you have to make sure everyone really understands what their job is and is delivering the answers that matter; that you are setting up an incentive-and-reward system for delivering answers that matter and also setting up a measurement system to see whether they have delivered answers that matter.
That’s why internal experience or employee experience is important to an organisation.
Lastly, do you see Indian brands as becoming global experience brands?
Korean companies have succeeded very well in the International market recently. Take Samsung for example, which is now taking on Sony. China is going places. So why not India?
Yet, in spite of great promise, India as a country has not been very successful (at this point in time) to promote itself very well. It has not been able to market its products successfully in the international markets. Many recent developments around the world have made it very favourable for Indian brands to find an entry into the international markets. For example, Indian music is hot; Indian fashion is becoming more and more noticed in the US and in Europe. Then there’s this big trend in the US and Europe to pamper yourself...to use all sorts of spa services and aromatherapies. Asian healing techniques: meditation and yoga are extremely popular - and which country is better than India in providing products for that sort of lifestyle development in counties like the US and Europe? But we have seen very few such initiatives from Indian companies.
So I think there are great opportunities for Indian companies to finally launch brands that will be recognised and will compete on an international scale

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Manoj Khatri is the Editorial and Research Coordinator of Strategic Marketing. You may send your feedback to him on manoj@columnist.com