Brand Confucian

 Marketing ethics 101: don’t lie to people

According to Yonhap news, Consumers Korea, a consumer advocacy group, released a report showing that several international and local Korean baby skin care product manufacturers are marketing products containing potentially harmful chemical preservatives and fragrances as ‘natural’ or even ‘organic’.

Seven of nine products labeled ‘organic,’ tested positive for potentially harmful chemicals including parabens, benzyl alcohol, PEG, and unqualified ‘fragrance.’

Working as a consumer products marketer I became familiar with just how difficult it is to create ‘natural’ products that perform decently in the market. Most of the additives mentioned by Consumers Korea serve a particular function. Without them product quality would suffer. 

In order to make product smell better, smoother, more viscous, less viscous, etc. the R&D guys insist you’ve got to keep the additives. It’s either that or kiss the product’s quality controllability/ acceptable expiration period/ temperature resistance/freight strain certification goodbye.

But your job is to sell. The market demands organic. Your competitors have removed all parabens and other chemical additives from their entire line – and pulled fragrance to boot.

“And you can bet they smell like dog shit and will rot if they’re not refrigerated too,” is the official response from R&D to your upbeat ‘if they can do it, we can do it better!’ market assessment memo.

So you’re forced to re-group. “Is there anything we can do to be more natural?” And this is where you begin to fuck up.

Just because you throw in a few ‘natural ingredients’ or even a single organic one, if the overall product formula contains parabens, unqualified ‘fragrance,’ PEG, or benzyl alcohol, you best not be claiming ‘natural,‘ let alone ‘organic’ on your product labels, or you are going to incur the wrath of some very belligerent consumers – namely baby mothers.

Granted, none of these ingredients are banned, or have even, quite frankly, been scientifically proven harmful beyond a shadow of doubt. But that is not the point. 

These marketers went wrong when they failed to deliver on expectations. And while their copy tricks probably seemed clever at the time, real marketing is about the end game. Real marketing is about the long-term relationship a marketer forms with the customer. If you’re tricking your consumer with your messaging, and they figure it out – and they will fingure it out, that copy is going to self-destruct. And it might take the brand down with it. Bottom line is, you had better be able to deliver on your value proposition.

Although I’m not going to list all the offenders, Boryung Mediance (보령메디앙스) deserves a dis-honorable mention for ‘Nuk Natural Diaper Cream.’ One would think that after the big asbestos-powder fiasco the company would at least make an effort at minding its PR p’s and q’s. But then again, I’m probably expecting too much from a company that came up with “Nuk” for a baby product line. On the other hand, with a name like that, maybe excessive harmful chemicals are totally in line with brand values?? Who am I to judge??

According to a May 17 report issued by marketing and communication firm Cheil Worldwide (below CW), Korean consumers purchasing patterns are overall less reactionary and more situational than they have been during past recessions. While still broadly sensitive to the economic environment, CW claims Korean consumers learned how to internalize and individualize the recession from their experience in the 1997 Asian financial crisis (broadly, if misguidedly, referred to – even by the media – as the ‘IMF crisis’ in Korea).

As reported by YTN 24 News CW identified 5 ‘broad’ consumer behavior types in the current recession:

Observing – 30% (불황주시형)

Demographic: Married individuals in their 40s. Upper-class white-collar households with monthly income exceeding 5 million won made up 44.2 percent of this group.

Behavior: 82.8 percent acknowledge the severity of the recession but don’t make large changes in purchasing patterns.

Synchronizing – 24.1% (불황동조형)

Demographic: Middle class families in their 30-40s. This group is dominated by homemakers and households with monthly income of 3-4 million won.

Behavior: 89.3 percent express concern about the severity of the recession. Synchronizers display a blind ‘alignment’ behavior toward the recession. This group is particularly likely to decrease (70.4 percent) consumer spending, most typically by ‘trading down’(55.3 percent) before nixing discretionary spending.

Korean Consumer Recession Purchasing Behavior Trends

Subordinating – 22.69% (불황복종형)

Demographic: Self-employed individuals and men figured heavily in this demographic. Families with monthly income of less than 3 million won were common. High household debt was also a common denominator for this group, with the average debt to income ratio at 71.8 percent.

Behavior: This group indicates a willingness to cut without regard to a commodity’s category or importance. Insurance is the only expense that seems to stick with this group.

Self Preserving – 14.7% (불황자존형)

Demographic: Unmarried individuals in their 20s.

Behavior: This group tends to contradict itself. While 94.8 and 74.2 percent respectively claim they are decreasing or delaying discretionary spending, only 3.1 and 2.1 percent respectively indicate willingness to give up favorite products and brands. This group displays an overwhelming (74.2 percent) aversion to decreased ‘personal investment,’ regardless of the economic environment.

Disregarding – 8% (불황무시형)

Demographic: Unmarried professionals and women dominate this demographic. Single income households with monthly income exceeding 5 million won comprise 47.4 percent of this group. As a group, disregarders display a better-than-average debt to income ratio of 45.6 percent.

Behavior: This group is motivated by quality of life and indicates a willingness to maintain discretionary spending.

The take-home message: now is not the time to cut back on marketing. Each of these groups – even the subordinators – can be reached through targeted communication. But marketers need to focus on 3 Re’s of Re-cession.

Re-search, research, research – Insights gained during a downturn are triply valuable because a) your competitors are likely cutting their research budgets and therefore sharpening your edge by default b) consumer behavior is more volatile making mistakes more costly but also creating hidden gem opportunities for those ready with the right message at the right time and c) recessions create an atmosphere of defacto group-think for marketers (especially those whose research budgets have been slashed) making it easier to zig group zag if you’ve got your message properly targeted.

Re-think pricing strategies. Now is not the time to slash all inventory by 50%. The Korean market in particular is ripe for price re-anchoring. It is important to maintain a broad perspective. Take a fresh look at your overall portfolio and current customer segments. Can you tweak your product offering or value proposition to increase market share or even open a new segment? Don’t focus only on down-trading. Look at disregarders, Self preservers, and possibly observers as well (together comprising 52.7 percent of the market) as potential up-traders as well. People will be looking for value bargains as well as price bargains. Well positioned price promotions and communication can help to increase market share for premium products in new consumer segments. Be careful of steep discounting however, as it tends to hurt brand image (even though your image will be a little sturdier during a recession so long as quality and supply are reliable).

Re-view advertising spending. It is a well documented truth that recessions are a great time to grab market share through effective advertising. However it would be a mistake to blindly increase advertising dollars in a gamble to increase market share. If you can, maintain the marketing budget and increase reach (your budget should go further as costs go down). If you don’t have a choice and must decrease advertising spending do it the smart way. Look for ways to cut advertising’s length without compromising on frequency or reach. The most important thing to remember about advertising is that you have to do it better in a recession. Better doesn’t necessarily mean more, it means better planned, more effectively positioned and timed, better targeted and expertly communicated.