Summary

Mats Georgson argues that marketing extends far beyond communications to encompass strategic decisions about markets, positioning, and pricing, illustrated through examples like Coca-Cola's revival through new demand points and the flawed "circus story" that oversimplifies marketing as mere promotion.

 

Key Points

  • The classic "circus is coming to town" analogy actually misrepresents marketing by focusing only on promotional tactics rather than upstream strategic decisions about what the market wants and how to design the offer [3:40] [4:22].
  • Coca-Cola reversed its declining category by identifying new "demand points" rather than through advertising, such as positioning smaller bottles as personal treats and allowing premium pricing that increased average sales price by 80% over 15 years [8:21] [9:23] [10:57].
  • True marketing strategy requires knowing where future demand will originate, not simply projecting financial targets without understanding what will drive customers to part with their money [15:00] [16:50].
  • Effective marketing demands clear choices about who you serve and who you do not, as attempting to appeal to everyone prevents proper prioritisation and strategic sacrifice [17:10] [18:57].
  • Pricing must reflect the complete offer including convenience and experience, not merely cost-plus calculations, as demonstrated by how consumers pay vastly different prices for toilet brushes depending on context [19:56] [21:23].

 

Transcript

Transcipts are auto-generated.

Kiran Kapur (00:00):
Marketing is the colouring department. Oh, look at marketing. Oh, we're snapping away photos for social media. Oh, give it to marketing. They'll find something to say about it. For many people, marketing means communications or marketing communications, mark comms. And my guest today is going to debunk that and convince you that marketing is much more than just communications. I'm delighted to welcome Mats Georgson, who is a marketing strategist, advisor to CEOs, and I have to say, a prolific writer on LinkedIn, and I thoroughly recommend following his LinkedIn profiles. I always find I come away with something to think about, Mats. Before we start, tell the audience where you are.

Mats Georgson (00:50):
I'm in the Styx, like a rural area northwest of Stockholm, about 120 kilometres in my farmhouse.

Kiran Kapur (00:58):
And because this is a British podcast, I have to ask, what's the weather like?

Mats Georgson (01:03):
We're close to something called Brit Summer, but you would expect that to be about Britain, but it isn't. It's actually because of a naming convention in the calendar where a warm October is called Brit summer. We actually have 19 degrees.

Kiran Kapur (01:20):
Interesting, because in England we would call that an Indian summer, a later summer. Yeah.

Mats Georgson (01:27):
And the first time I thought about it, I did think it was about a British summer, which kind of infuriated me as something that would be warm in October, but it isn't. Yeah.

Kiran Kapur (01:40):
And I have to say, because I normally whinge that it's a grey and overcast Cambridge. Cambridge is actually sunny and beautiful at the moment, which is a nice change. So I started off with some sort of provocative statements, all of which I have heard over my career about marketing just being marcoms. And before we get into the difference between marketing strategy and where marcoms sits and where marketing strategy actually is, you started in marcomms, didn't you? Your PhD is in marcoms.

Mats Georgson (02:07):
Yes, technically speaking it is. I did my PhD in the US, actually a master's and a PhD at University of Connecticut, and they had a very wonderful programme where you mixed behavioural sciences with the business school and marketing and stuff like that. So technically speaking, yes, it is in marketing communications.

Kiran Kapur (02:29):
But you obviously see marketing, as we all hope everybody does, it's a much wider thing than just communications.

Mats Georgson (02:36):
Yes. In fact, it's another kind of paradox with me because I discovered marketing through advertising. Already in high school, I picked up the books of the old advertising greats like David Ogilvy and Bill Bernback and stuff like that. And kind of nerdy, I read that on the subway to my high school. And at first I was amazed by the sheer creativity of it all, the sort of seemingly simple ideas that turned things around. But then when I realised just how much work they did in depth of understanding the business and every moving part and how also they tweaked other things to better fit the market, I understood that it was a much bigger thing. So the paradox was that before I even read anything formally about marketing, I discovered that it wasn't just advertising.

Kiran Kapur (03:31):
One of your LinkedIn posts that I picked up and you talk about the very famous marketing circus story. So can you perhaps talk us through that?

Mats Georgson (03:40):
Well, I'm sure you've heard it, that a circus is coming to town and if you put up billboards, you're doing advertising, but if you see the story, so people will talk about it, that's PR, blah, blah, blah. Now, the thing is that it's a kind of a neat thing and it did, I think, formally show up in a book on PR, but it's still just marcoms. So in the end, that circus story is funny and approachable, but still gives you the wrong moral of the story because it's all about that the circus, the town, the pricing, the audience, they don't talk about any of that. And then they say everything is marketing and it really isn't. It's just like jumping directly into promotions and just promoting a circus and that's wrong.

Kiran Kapur (04:33):
So how should we approach the circus story? Because yes, I mean famously it's billboards and then you send the dancing girls through on the back of elephants and that's advertising because that makes everybody, or promotion, I can't remember which because it makes everybody set up and take notice. So everybody now knows the circus is in town, but actually it's the next stage, isn't it? It's how much it costs to go or whether it's easy to get to.

Mats Georgson (04:56):
Even more upstream than that. I think in the famous book Blue Ocean Strategy, there is coverage of how Cirque de Soleil for many years were tremendously successful because they started more with what is a circus anyway? Who could conceivably want to go there? And what happens if you tweak it more to the adults than the sort of just traditional family thing? What happens if you tweak? What does that mean? They decided, for instance, no animals for various reasons. So if you go upstream, what makes people even consider going to a circus and what are the people that opt out of not wanting to go to a circus and maybe for the wrong reasons, how could you reach them? So the first thing in marketing always is the market in marketing, what is the market? And then after that, you devise what the offer is and what towns you would even decide to go to if you're a permanent circus or a travelling circus and all of these things is marketing decisions.

(06:03):
So that's really what it is.

Kiran Kapur (06:06):
Yes. I mean the Blue Ocean, Red Ocean, which it's a lovely thought that Blue Ocean is trying to find a new way of looking at a market, whereas Red Ocean is sort of red with the blood of your competitors is the only way I can ever think about it because we're all scrambling for the same area and the same thing. And you're right, Cirque du Soleil just went, well, we don't have to be a travelling circus. Well, they are a travelling circus, but we could be something else. We don't just have to be a family entertainment. Okay. And one of the other LinkedIn posts that I really liked, and again hammers this home, is your discussion about Coca-Cola.

Mats Georgson (06:41):
Yeah, I find that a very amazing thing because it started with Mark Ritzen writing about it, and I tend not to comment on the most visible consumer brands so much because everybody else is doing that. But I was kind of amazed because he said, "Oh, they're so consistent in marketing and we got to remember that marketing is about consistency and all of that." And I was like, "Consistency in what?" Because I really had bits and pieces of that story and I went back and really looked at it. And okay, here is what I gathered. If you travel back in time, now make all of these sort of hazy movie things when people move back in dream time. If you go back to 2010, if you worked at Coca-Cola, you had all reason to be worried because everything looked bleak because people had woken up in general in terms of consumer preference that they didn't want to put endless amounts of Coca-Cola or any other soft drink in their stomach.

(07:49):
There were also other alternatives. People wanted to drink more waters and juices and you had energy drinks on another fringe. So basically everything just looked like this is a so-called category in decline. And most companies would have said, "Okay, let's save money, go hedgehog, try to survive this. Maybe one day it will turn around and consumer sentiment or whatever." Coca-Cola being Coca-Cola refused. We're not going to just lay down and weather it. And what they in essence did, if you look at it, is that I talk about demand points to points where you could reach for a Coke. Whether you even think about it now as a soft drink or not, it's still a demand point if it could potentially be when people reach for a Coke. And they found a lot of new opportunity in these demand points. For instance, it's okay to drink a diet Coke after training, put one in your training bag.

(09:00):
That's sort of an emerging behaviour. You also had luxury behaviours that you wouldn't mind putting it on a dinner table as the non-alcoholic thing because people actually like less alcohol these days too. And oddly, that one opens up on the dinner table to have more compelling alternatives. And another was that people, for instance, pointed to that they like to have a little treat for themselves, but unlike before, that treat would not be a two litre enormous and stale Coke bottle in your fridge, but rather like a fresh one, a small one, and you open it and it's really carbonated and nice and you drink it in one go. Now, so all of these things basically, in general, it pointed to smaller bottles, which interestingly also meant that they could sell at a much higher price per litre. So in fact, during these 15 years, they have increased slightly in penetration because there are just more occasions, so you meet slightly more people.

(10:15):
Overall volume is not such a success, but the average sales price has gone up to 80% in 15 years. So what they did was that despite all the normal outlook, if you just look at the soft drink category is headed to oblivion, they actually managed to grow under these circumstances, and I find it very, very fantastic. And now here's the most cool part of the entire story. Did I mention advertising even once? Did we talk about trucks plunging through the snow or the Santa Claus redness being a Coke invention or anything like that? No. And in fact, to sort of hoke a little bit at Ritzen, no, it wasn't consistent marketing at all. It was actually an inconsistent marketing from before that they did a new analysis, new things, new venues, new occasions to sell their Coke. So it really is, I think, such a great story on how marketing really saves the day, not advertising.

Kiran Kapur (11:25):
It's also interesting because they reformulated the sizing. You as a consumer, I mean, if they keep putting up the price of a two litre bottle, I'm going to spot that because I've been buying two litre bottles. You resize it and I haven't got a direct price comparison point, so you're going to reset that for me. And that's so clever.

Mats Georgson (11:46):
And I think also to an extent that you're happy to pay for the bottle. I mean, on occasion we do. I mean, if you buy a perfume, you also pay for the bottle and you know it. You don't want it to be in a plastic thing. I mean, it's like a little jewel and in a very miniature format. I think small Coke bottles have that kind of perfumey kind of added value to our lives that it is now a treat on a different level than from the ginormous three litre bottle. So yeah, I think it profoundly changes the way we see it.

Kiran Kapur (12:25):
That's interesting. And I have to say, that's probably the first time anyone suggested Coke was like a perfume, though I do know exactly what you mean. It's the packaging, it's the experience. And we all tend to be about thinking about the coherent experience now. So one of the things you do a lot on your LinkedIn site that I enjoy very much is you produce cheat sheets and they're very eye-catching. They're usually in bright red with white text on it. You can't actually miss them when they come up on your feed. I would say that was consistent marcoms, but it is what you write about that interests me.

Mats Georgson (12:59):
It's certainly distinctive brand assets, which ironically I find less important than Ehrenberg Bass Institute does, and yet I have them and they don't.

Kiran Kapur (13:15):
But on a LinkedIn feed, when there's so much that comes in, having something that is consistently catches your eye, particularly when it's bright red, I have to say does work. The one that really caught my eye was you talked about the difference between do you have marketing or just marcoms, which is very much what we are talking about. And you have six things and it's really quite fun because you ask them to score yourself and actually the higher your score, the more you have a problem because actually you've just then got markcoms rather than marketing. So I just wanted to talk through a little bit about where you came from with those and why you think those are so important.

Mats Georgson (13:55):
I mean, it's really also just back to the basic thing of what marketing is. And I remember I had also luck in my career because I had a few good mentors and one of them very often said, "Is this a communications problem?" And I think that regrettably, those people are rare today that have the guts to just take a step back and say, "Where does this really fit in and how do we approach our business challenges holistically like Coke did?" And instead everybody's way too eager to just jump onto anything that somebody else in management calls a problem and the answer is some kind of campaign. So I really think that that is where I was coming from. How could I, in maybe a bit more contemporary way, do what my old mentor did when he said, "Is this really a communications problem?"

Kiran Kapur (15:00):
So your first one that you give us is, "Do you know where your next year's demand, so 2027 demand will come from?" And you are very clear that the problem is we tend to just pluck a number or have a forecast.

Mats Georgson (15:15):
Yes. I think frankly, I mean, I've literally seen hundreds of times when financial targets are set. It's almost amazing how it happens. Very often it's just projections. Sometimes it's like a management consultant did it, so it has to be right, which is like, yeah, but it's a bit scary if we don't even know where that demand is that we're going to go for. And another fallacy that I find quite amusing is that every company every year has setbacks. It can be anything. You have a factory that had a fire, you were hit by the Iran war. Whatever it is, they're always going to be like these, they're not very black, those ones. They're actually not impossible to predict, but you just never know if one is going to hit you. And every year statistically, some stuff hits you. And then frankly, most management teams always think that since we now have resolved that problem, everything looks brighter, but they then discount is the fact there's going to be another bird hitting you.

(16:25):
Yeah. So I find that a lot of financial targets are set very separate from real strategy discussions. So I think that is why I think that the first answer is, and that is very much a marketing question. What is the market that is going to say, be willing to part with their money in additional volumes that will actually convert to your revenue? Where is it going to come from?

Kiran Kapur (16:52):
You are right. And how often do forecast... I mean, forecasts never include the problems. I mean, when we went through COVID, all right, all forecasts had to go out the window because we weren't expecting that one. That was a bit of a shocker. But by 2021, we're all going, right, it's back to normal now. And of course it wasn't. We have the next wave and the next problem.

Mats Georgson (17:08):
Yeah, exactly.

Kiran Kapur (17:10):
So you also sat, and this is a marketing question, you talk about strategy. Can marketing say who you are for and who you are not for? And I think that's who you are not is quite interesting.

Mats Georgson (17:22):
Well, I think that is also a thing that you always have to select your addressed market. You have an address sub bull market, which is your total potential market. But if you try to serve everybody in every possible way and you have no prioritisation, you're always going to start making bad calls. I think, what can I say? I mean, I worked in the mobile phone industry for five years. I was the global brand director for Ericsson and Sony Erickson, and this was before the iPhone set the iconic way of making a smartphone that is still say so ultra dominant. But on the road there, there were so many unknowns, and a lot of people read the market signals in a different way, which were also true, but that there were a lot of people that just wanted cheap phones back then that gave us the signals that I just want a phone to call people on, don't give me all the other features that I'm never going to use, et cetera.

(18:34):
And I mean, it's not like they were wrong there and then, but of course, if you decide to listen to them, you are no longer in the market. I mean, there was a bloodshed as it was, but it's really, really important to understand that it always comes with priorities and you always have to sacrifice. If you never sacrifice, you don't have a strategy. And a lot of people are obsessed with the positioning, but they don't see that the mirror image of that is also the segmentation and targeting, which is that when you choose your target group, you then implicitly also choose what you can become.

Kiran Kapur (19:19):
Yes. And it is one of the things back in the days when I used to do consultancy work with startups, people were always coming to me, and I would say, who's your target market? And the response would always be everybody. It's like, well, come on, you're selling a dating agency. So start, you don't want the happily married. What's the point of... They're no use to you or whatever. Well, they've got to be adults. That was the other one. But yes, everyone always just wants to get everything because there's such a fear of missing out. I'm going to miss a bit of market.

Mats Georgson (19:47):
And in the end they go, okay, people 16 to 74 with disposable income. Okay, that's helpful. Yeah.

Kiran Kapur (19:56):
Yeah. Okay. I also want to pick up on price because you have this very good point that cost plus margin is not pricing, which is absolutely true, but it's still how we all set our prices. Not everybody, but it's still very easy to go, well, accounting will sort that out. Finance will sort out the pricing and they'll just tell us what it should be. But I'm guessing you are going to push back again and say, this is very much a marketing side.

Mats Georgson (20:22):
Well, absolutely. I think that there is this thing that I think everybody hears in every company sooner or later that is, well, in this circumstance, people just buy on price. And it's like, well, the price of what? And I give the example of, what are you willing to pay for a toilet brush? And people look at me like, what? And then of course you can sort of tease them with that Alessi and others actually sell toilet brushes for about 100 pounds. And then they say, "Yeah, yeah, yeah, but that's so niche." I ask them, "What did you pay last time?" And they say, "Well, maybe four pounds, five pounds or whatever." And I say, "You paid way too much." And they're like, "Why?" "Well, because I can get you these for 20P. "And they're like," What? Yeah, this is one catch. You got to buy 10,000 because I order them from Alibaba and you will have a container in your garden with toilet brushes.

(21:21):
"And they're like," That's ridiculous. I'm not paying that. "Well, see, you're not just buying on price, you're buying on when you get access to the number you need conveniently at your local supermarket. This is the offer. The offer is not just a toilet brush and nobody ever just buys on price. And they're like," Oh, okay. "So then I'm like," Let's discuss what is our offer and what makes people pay a certain price for that. That's the price discussion.

Kiran Kapur (21:49):
I love that example. And yes, I mean, I would be talking about why LSE can get away with spending as much as they can because it feels nice to use and it's a beautiful product, et cetera, et cetera. But actually you're absolutely right. At the other end of the marketplace, I'm still paying for convenience and what I want.

Mats Georgson (22:05):
Yeah. It's funny. I mean, so much is invisible to people who really should know better because they're running businesses themselves, but they assume so many things that is actually really up for discussion, which is also the sort of marketing strategy job.

Kiran Kapur (22:27):
And then my last one was, and it sort of brings us right back around to marcoms, where you say that how much of your marketing department's week goes to communications, and if it's nearly all, that's a communications factory.

Mats Georgson (22:41):
Yes. Well, I think it's a good diagnostic because I think that most marketers spend almost all their time on planning communications, making communications, placing communications, and analysing communications and reporting communications. Some people say that just reporting it is half their time, but that is what I call the communications factory. I mean, the irony is that I sometimes meet heads of marketing that have absolutely no time to discuss proper strategy because they're so busy in sitting in production meetings all day, which of course is kind of tragic for everybody involved, I think.

Kiran Kapur (23:30):
Absolutely. So if I was sitting here thinking, and maybe perhaps I am, that, oops, I think maybe I've pushed my marketing department into that sort of marketing comms factory, what would be your recommendation? If you've got a CEO that sits there and they have this light bulb moment because they're talking to you and they're going, oh, we shouldn't be doing that, what would you suggest that they did?

Mats Georgson (23:49):
The CEO? Well, I think the first one is be gentle because frankly, if you've put a head of marketing in the situations that they're running a communications factory, you can't really expect them to be comfortable with suddenly getting totally out of that. I think that some of the things is really invite them to talk upstream. What does the market look like? And as I say, define the market in demand points rather than in categories and the products we make. I mean, marketing starts with customers, right? They don't start with products or anything else and be a bit patient about really defining what are the needs and wants and in what moments that drive demand for what we generally kind of do. And then what is competing at every situation for these things. The lessee toilet brush is thought of in gift situations. It's not thought about in just the utility kind of things like you should replace them because the old one is yucky kind of situation.

(25:04):
So it's different stuff. And too often we jump to just thinking about products and their inherent similarities or dissimilarities as that being shaping an offer. And that often leads to a very convoluted kind of thing that ends up in just being commoditized anyway. So I think that draw this map and also invite to price discussions, like what is the price we can charge because what is really the offer underneath this? What is the value we add? Also talk about pricing in a way that is not just the number, but also in payment terms and other parts that is a lease or a rent or a service. All of these things can profoundly change things and invite your head of marketing to be part of the discussion and don't expect them to sort of be instant wizards, but also of course demand a little bit from them that they actually have the market perspective.

Kiran Kapur (26:10):
And perhaps give them time to do that and not be permanently in planning meetings. Yes. Mats Georgson, thank you so much for that overview. I'm sure you convinced everybody that marketing is more than marcomms, and we've gone via circuses, Coca-Cola, and toilet brushes, which I think is fantastic.

Mats Georgson (26:28):
It's the essence of life.

Kiran Kapur (26:32):
Thank you so much.

Mats Georgson (26:34):
Thank you.