Why Marketing Is Like Making Martinis

Sep 9, 2009   //   by Erik Olson   //   Blog, Thought Leadership  //  No Comments

CMO Calculus
Why Marketing Is Like Making Martinis
Mike Linton, 04.28.09, 11:31 AM ET

Let’s say you own a bar with a good clientele that has remained loyal over the years because your barkeeps make excellent cocktails. Your bar’s reputation and its margins are based on your delicious mixed drinks. Up until now, that is, when sales are falling and the pressure is on for you to maintain profits.

For discussion purposes, let’s assume you’ve done everything you can with the lease and labor. What you have left is the drinks, and a martini could, metaphorically, be viewed as your marketing plan. How do you keep the brand moving forward in tough times and still make money?

Let’s take the cosmopolitan: four parts vodka, two parts cranberry juice, two parts Triple Sec, one part lime juice, a lime rind and a swizzle stick. These symbolize your marketing mix–with vodka as the basic, proven sales ingredient (say direct mail, Internet marketing), cranberry juice as your long-term branding and advertising efforts, triple sec as promotions, lime juice as PR and the lime rind and swizzle stick as experimental efforts (like mobile marketing). What should you do to keep serving martinis in a way that lets you make money today while keeping your clientele coming back for more?

This is a difficult situation and I don’t know the right answer, though I do know the wrong one. The wrong answer is to slash costs by cutting back on the ingredients that make your drinks great, meaning you start thinking about your value proposition instead of the consumers’. In other words, choosing to risk your brand (Cosmo) integrity by forgetting what made customers choose your brand over competition in the first place.

The first step is to cut out all of the martini components that aren’t mandatory, like the lime rind and the swizzle stick. I mean, who needs a swizzle stick, really? It is completely impractical. And a lime rind is labor intensive and gets thrown away! We can just dispense with the whole fresh lime thing and save a ton.

Let’s replace fresh limes with packaged lime juice and use the savings to make the quarter. In marketing, this is the equivalent of stopping all sponsorships and social media experiments. The martini is still essentially the same, it just looks–and tastes–less interesting.

Oh my, business isn’t responding. Hmmm. Triple Sec is expensive. We only use a little in each drink, and it sits on the shelf collecting dust and taking up inventory dollars. The ROI on Triple Sec is low and far less efficient than the return on vodka. In fact, vodka returns three times as much since we buy it in bulk and use it for so many other drinks.

While we’re at it, let’s lose Cointreau since it’s just another orange liqueur and the consumer is really in it for the vodka. We can replace Triple Sec with vodka! Think of the efficiency! This is the equivalent of replacing all of your television with search and couponing efforts resulting in a high alcoholic content, but a lot less flavor.

Traffic is still declining in spite of everything. What to do? Cranberry juice is so overrated! In fact, with drink sales tailing off we have excess juice and it returns less than vodka. My God, that’s the answer! We’ll replace cranberry juice, which can spoil and needs refrigeration, with vodka, which has an infinite shelf life. Twice as much vodka at the same price and our margins are intact! The customers will love it!

You can see where I’m going. In the end, what you end up serving is pure vodka and customers move on to a place that serves the cosmopolitans or the martinis–or whatever–they want to buy. If they wanted vodka shots, they’d probably stay at home in the first place. This is the marketing equivalent of putting all of your efforts into one glass and hoping you can relaunch the “genuine martini” once the recession is over.

We’ll just dust off the old marketing competencies and tell consumers that our martinis “Now taste as good as before and look even better!” Problem is, consumer value is based on their terms–not yours. You can’t be inconsistent–cutting-edge and interesting in boom times, become an “efficient” brand when the going gets tough–and expect customers will put up with shabby drinks until you can afford to mix the cocktails they like.

In my opinion, there’s probably a better martini answer that might include special pricing on weekdays, happy hour extensions, a recession special, mini-martinis with mini pricing, lower margins in the short run to maintain sales, a martini loyalty program … but always things that keep your “martini integrity” intact.

So do what you have to do to survive, but don’t assume you can just “turn on” marketing when you are ready and can afford it. Marketing is like a martini in that people remember the drink quality and the place a lot longer than they remember the vodka buzz.

No martinis were harmed in the writing of this article.

Mike Linton was, until recently, CMO at eBay. Previously, he was the first CMO at Best Buy. He joined the electronics retailer in 1999 from James River Corp., where he worked as a vice president and general manager. Linton started his career in brand management at Procter & Gamble.

Origional Article Located: http://www.forbes.com/2009/04/28/roi-martinis-marketing-leadership-cmo-network-linton.html

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