October 1, 2008

Holism is the concept that the whole has a reality independent and greater than the sum of its parts. Marketing people should pay more attention to this concept.

Take Tiger Woods’ endors ]]>

But wait. According to Forbes magazine, Tiger Woods made $115 million last year, including $90 million in endorsements. More money than any other athlete in the world. He owns a $20-million, 155-foot yacht. And he drives a Buick? Highly unlikely.

Nor is Tiger Woods’ endorsement working in the marketplace. Buick sales in the U.S. have declined every year for five straight years. From 432,017 vehicles in 2002 to 185,791 vehicles in 2007. Last year, even Subaru outsold Buick.

Another point. If Tiger Woods endorses Buick, who is left to endorse Cadillac? God?

It’s a stretch, but Tiger in a Cadillac is a plausible endorsement. To quite a few people, the best American cars are on a par with the best European and Asian cars. So Tiger drives the “best” American car. A Cadillac, of course.

That’s holism at work. Look at the big picture, not just the details.

Take Tiger Woods’ endorsement of Nike, the No.1 athletic brand in the world. That also makes sense. But suppose he had endorsed Reebok instead. Would that have worked? Of course, not.

And how about the mathematicians and computer scientists who developed the art and science of risk management on Wall Street. They hired Ph.D.’s to build sophisticated systems to comb through complicated mortgage portfolios to analyze everything that could possibly go wrong.

Now it looks as if they missed about $700 billion worth of things that could go wrong.

Why didn’t they look at the big picture? When you put a person with no down-payment (or a low down-payment) in a home that costs hundreds of thousands of dollars, you are asking for trouble. No computer is as smart as a human being with a holistic point of view.

(After World War II, a shortage of cars created a seller’s market. Prices skyrocketed. Then things returned to normal, as they usually do, and many people found themselves with vehicles worth less than their car loans. A number of young guys I knew owned cars that were underwater. So they went out and “burned” them before they were repossessed. They deliberately over-revived the engines to destroy them.)

I wonder how many houses have recently burned down in mysterious fires.Everything is interconnected. When you make a change in one area, you also affect many other areas.

Take the 1982 launch of Diet Coke, the “new product of the decade.” As successful as Diet Coke is, the company has paid a big price. Regular Coca-Cola sales have declined substantially.

The Coca-Cola Company considers Diet Coke and Coca-Cola Classic to be two separate brands. But consumers connects the two and not always favorably. For many consumers, regular Coke has “too many calories” and Diet Coke “doesn’t taste good.”

To solve that problem, Coca-Cola introduced “C2,” a cola with half the calories of regular Coke. That might be logical from the company’s point of view, but not from the  consumer’s holistic point of view.

If consumers want “taste,” they buy Coke. If consumers want “low calories,” they buy Diet Coke. If consumers want __________, they buy C2. (Try to figure out what word to put in that last sentence.)

More choice often puts consumers in a bind. They often wind up with a “none of the above” reaction.

Take the launch of Sugar-Free Red Bull. That solved a problem many Red Bull drinkers never knew they had. “Geez! I didn’t know that Red Bull was loaded with calories.”

Take the launch of Red Bull in 12-ounce cans. That put many Red Bull drinkers on the horns of a dilemma. “The 8.3-ounce cans look expensive as compared to the 12-ounce cans. On the other hand, I’m used to drinking Red Bull in the smaller size cans. Now what?”

Campbell’s Soup has introduced chicken noodle soup with “25 percent less sodium.” What does that say about Campbell’s regular chicken noodle soup? That it has too much sodium?

Then there’s Campbell’s Healthy Request line of soups. What does that say about Campbell’s regular soups? That they’re unhealthy?

Then there’s Campbell’s Chunky soups. What does that say about Campbell’s regular soups? That they’re thin and watery?

Then there’s Campbell’s Chunky Fully Loaded soups. What does that say about Campbell’s regular Chunky soups? That they’re not really chunky?

Recently Campbell’s has introduced the Select Harvest line of soups. Full-page, full-color newspaper ads compare Progresso (“Made with MSG”) with Campbell’s Select Harvest (“Made with TLC.”)

That might impress the few people who buy Progresso soups, but how about the large number of people who buy Campbell’s other soup products. If Campbell is making a big deal out of “no MSG” in Select Harvest, then the other Campbell soups must contain MSG. I’m sure that’s not what Campbell intended to say.

Every single product introduction has “unintended consequences.” While companies have marketing people focused on individual brands like Diet Coke, consumers are holistic. They see the big picture.

Why should the marketing people at Buick care about what the marketing people at Cadillac are doing? Because consumers see a hierarchy of brands at General Motors from Saturn at the bottom to Cadillac at the top.

Or is it Chevrolet at the bottom and not Saturn? Who knows? Apparently the people at General Motors haven’t figured this one out yet. No wonder consumers are confused, too.

What happens when a company runs a sale? Far too often, a consumer thinks, “Their regular prices are too high.” Run enough sales and nobody is going to buy at regular prices, a problem currently facing the middle-of-the-market department store chains.

What happens when a company issues a coupon. Same problem.

Charmin became the leading brand of toilet paper by focusing on “softness.” The package said “squeezably soft” and the television commercials featured Mr. Whipple who warned consumers, “Please don’t squeeze the Charmin.”

So now Charmin comes in an “ultra soft” version. Does that mean regular Charmin is not really soft?

Are we going to see an “ultra safe” vehicle from Volvo? Or a “super ultimate driving machine” from BMW?

Consumers are usually more holistic than company representatives. Look at how Lehman leaders handled the company’s recent financial troubles.

September 2007: “Our liquidity position is stronger than ever.” Christopher O’Mara, chief financial officer, Lehman Brothers.

December 2007: “We have come through the current downturn very well positioned on a competitive basis.” Erin Callan, the new chief financial officer, Lehman Brothers.

June 2008: “We do not expect to use proceeds of this equity offering to further decrease leverage, but rather to take advantage of future market opportunities. Over all, we stand extremely well capitalized.” Erin Callan, chief financial officer, Lehman Brothers.

September 2008: “We have materially reduced our residential mortgage exposure and marked our remaining holdings to levels that make future write-downs unlikely.” Ian T. Lowitt, the new chief financial officer, Lehman Brothers.

September 15, 2008: Lehman Brothers declares bankruptcy.

It wasn’t what Lehman financial executives said that made a deep impression on investors. Rather it was: Why are they saying this? It’s only when a company gets in trouble does it need to reassure investors that it’s not in trouble.

Warren Buffett never issued a statement declaring that Berkshire Hathaway was “extremely well capitalized.”

Before you say anything in a marketing program, ask yourself, How are consumers who look at things holistically going to interpret this message?

The hole in many marketing programs is the lack of holism.