SM Investments rated an outperform

Macquarie Research Equities on Tuesday gave conglomerate SM Investments Corp. an "outperform" rating, saying it is confident that the company will meet its full-year income projection.

"Retail businesses always show higher earnings in the fourth quarter," it said in a recent client note.

The brokerage firm also gave SM Investments a 12-month target price of P395.

In the first nine months, SM Investments' net profit rose 14 percent year-on-year to P8.5 billion, which accounts for 65 percent of Macquarie's full-year profit forecast of P13 billion for the company.

Consolidated revenue for the period almost doubled to P82.6 billion, including contributions from SM Supermarket and SM Hypermarket.

"The results support our outperform rating on SM, which is our preferred pick in the conglomerates sector. Moreover, SM is the best way to play the reflation story in the Philippines given its strong presence in retail, banking and property development."

SM Investments, which is owned by tycoon Henry Sy, is the country's third-biggest company by market value.

Its subsidiaries include mall builder and operator SM Prime Holdings Inc., SM Development Corp. and Banco de Oro Unibank Inc., the nation's second-largest bank by assets.

Joel T. Go: Taking care of business at Ever Gotesco

Joel T. Go is bent on continuing the legacy of his grandfather, Go Tong and his father, Jose Go, the two famous names behind the Ever Gotesco Group of Companies.

This 34-year old graduate of Electronics Communication Engineering was not involved in the family business until after the conglomerate was badly hit by the Asian financial crisis in 1997 when the Gos were forced to close down their banking arm, Orient Bank.

“Our father did not want to involve us in the business then. He wanted us to do what we want to do. He wants to make sure we live our lives the way we want it,” the young Go recalls.

Joel, however, believes that he, together with his brothers, are destined to become the keepers of the family’s business empire which begun in 1975 when the old Gos built their first mall.

“Being part of this family means a lot to me and my brothers. We want the public to know that despite what happened to us in the past, our conglomerate is here to stay and we will continue to stay resilient,” Joel says, with conviction.

The financial setback experienced before by the group, he says, serves as a challenge rather than a misfortune.

“It’s a good thing that we had this problem when we can still manage to repair the damages. Whatever fault we had before, we now have to make sure that we will never commit again,” he says.

Joel started to take part in the family’s enterprise seven years ago. Eldest of three brothers, Joel sees to it that the efforts of the old generation Gos, to establish a business that is anchored on family values will not go to waste. Only 27 that time, he was already a hands-on executive handling full operations and marketing of Ever Gotesco malls.

In 2004, Joel was assigned as president of the Metropolitan Medical Center which the Go family acquired. Along with managing the hospital, he also oversees the over-all operations of its school — the Metropolitan Hospital College of Nursing.

One of the few strategies and techniques injected by the young Go to the traditional business practice in the Gotesco group was the introduction of a middle management which he now heads.

“Our team is constantly on the lookout for fresh ideas to incorporate in our marketing strategies, unwilling to find ourselves behind the competition but always in the middle of it all,” Joel says.

Manned by young and talented group of professionals, the middle management sees to it that every little detail in the company’s operation will be reviewed; and must be consistent with the group’s core ideology which is “Enriching the Lives of the Filipino People.”

“We have been slowly keeping our phase. We have been moving forward. But this time, we have to be more careful. We are studying every step we are making,” he adds. “Continue to run the ‘malls for the masses’ will still be our battlecry.”

To keep up with this momentum, Joel says the group will now focus on the right market and invest on right projects. Being in the third generation of Gos, Joel is proud to say that he is also a “people person” himself.

He asserts that this distinct quality of the Gos will bring the conglomerate to the next level. “We are going to build a company that will last,” Joel says.

Future plans

Based on the company’s five-year plan, it will be spending about P2.5 billion for the construction of four to five medium-sized malls.

“As we observe, we can not really compete with big malls. Metro Manila is saturated. So we will have to concentrate on the unserved market particularly in the suburban areas,” Joel says.

The company is now in the process of identifying the sites for the future malls. Among the areas being explored by the group are Parañaque, Laguna and Dagupan.

Aside from Gotesco Grand Central Mall, the group also runs Ever Gotesco Commonwealth Center, Ever Gotesco Ortigas Complex, and The Manila Plaza (Ever Recto).

Funds to finance these projects, he says, will partly come from internally-generated income. “Our cash flow is getting better. The revenue level of the group is stable,” Joel adds.

Joel says a number of banks have already approached them for possible loan arrangements.

“This only shows that many financial institutions still believe in the company’s ability to recover and expand its operation,” Joel notes.

The business blueprint of the company will also involve the renovation of its existing malls.

Next year, the group will start renovating one of its oldest malls, the five-hectare Gotesco Grand Central Mall located in Monumento, Kaloocan City.

By 2009, they will be putting up the first new mall with an estimated investment of more than P500 million.

Aside from pouring in capital in the expansion and renovation of malls, he says they will be investing P800 million to double the bed accommodation of UDMC to 800.

Modernizing the equipment and facilities of the hospital to cater to more advanced medical needs of their clientele, he says, is also part of the company’s medium-term plan.

The group also owns and manages a secondary hospital and nursing/retirement home in its 400-hectare golf course property in near Tagaytay. The Evercrest Golf Club Resort and Chateau Royal Sports and Country Club are being managed by the group’s Gotesco Land Inc.

A possible joint venture with a US-based hotel/ property developer is being explored by the group to take advantage of the growing potentials of the Batangas-based property.

“We can put an enclosed leisure/entertainment complex that may include spas, casinos in this property. This may also have a retirement home to cater to OFW retirees or even foreigners who want to spend their retirement period here,” Joel says. The idea of putting up a retirement home, he says, is consistent with the Gotesco group’s vision to maintain a family-oriented business.

“For one, our Ever Gotesco Malls shall become the household name for value-added shopping and every Filipino family’s mall of choice,” Joel concluded.

Competitive intelligence and ethics

QUESTION: Our head office in the US has just reorganized our marketing research department to direct its focus on competition. This has been renamed “Competitive Intelligence Department.”

Our head office’s CIS (Competitive Intelligence System) that we’ve been asked to install was developed by an ex-military. Some of its techniques for uncovering and monitoring competition are treading along the thin line separating what’s ethical from the unethical.

Also, the system has a whole lot of competitive information that it’s asking us to gather on a periodic or continuing basis. Those information fall under five categories: (1) the competitors’ capability and track record to develop new products and to innovate; (2) their capability to manufacture and bring new production capacity online; (3) their capability to market, to command a strong channel support and point of sales presence; (4) their capability to finance and to shift budgets among brands and market segments; and (5) their capability to manage and retain key managers.

There are over three dozen items under these five categories and with just one product line, we have 5-8 major competitors! We don’t know if we can adequately set up for the required intelligence requirements. But our CIS model says these data are necessary for us to be able to anticipate competitors’ future strategies.

We have two questions. First, what ethically acceptable competitive intelligence method can you suggest that will give us just as helpful a set of competitive knowledge? Second, does your method include a way for us to short list the vast number of competitive data our CIS requires for us to be able to predict a competitor’s future strategy?

Answer: On your first question, here’s that ethically acceptable competitive intelligence method.

We call it “The Survey Based Competitive Benchmarking Study.” Its complete research details are in the senior MRx-er’s third edition book, “User Friendly Marketing Research.” For answering your question, it’s enough to limit ourselves to the logic of the method and to an example of the results of its application so that we can appreciate its power at "insighting" competitor behavior and strategy.

The model does its competitive intelligence function along two related logics: a “behavioral logic,” and an “analytic logic.” Its basic behavioral premise states that everything that your brand does versus its competitors gets registered with the target consumers. For example, consider the case of your ethical marketing of a medication to doctors. Your brand’s marketing campaign consists of its ethical prescription and ethical OTC promotion activities versus those of your brand’s competitors. The target response of your brand’s campaign is its target doctors’ prescription behavior. To what extent the promo activities of your brand’s campaign has succeeded in generating doctors’ prescriptions can be gauged from the data on how doctors rate those promo activities against their priorities and against competitors’ promo activities. Those data are forthcoming from an MD survey.

The analysis of those data follows the logic of a simple functional equation. The equation simply states that a leader brand’s share of doctors’ prescriptions is a function of superior ethical prescription and ethical OTC promo activities and inputs. The analysis’ “benchmarking” framework directs a focus of the data analysis. That’s on “best practice” or the “best practicing brand” which is the market leader brand.

The example we used to illustrate the model’s behavioral and analytic logics involved the four competing brands in the NSAID (non-steroidal anti-inflammatory disease) category. These brands were Feldene, Mobic, Orudis and Ponstan.

In terms of shares of prescriptions (SORx), the survey pointed to Mobic as having the highest SORx and therefore the market leader. Ponstan was No. 2 while Feldene was No. 3. Orudis was the fourth ranking brand in SORx.

How did the market leader brand, Mobic, attain the “benchmark” position in the category?

To answer this, the survey based competitive benchmarking study gathered two sets of data: (1) how the prescribing doctors prioritized 16 ethical prescription promo activities in terms of how doctors regarded each of these activities as necessary for a pharma company to do to gain their prescription, and (2) which NSAID brand these same doctors regarded as doing the best or the most among the doctors’ prioritized promo activities.

The survey identified nine out of 16 as the doctors’ priority ethical promo activities. Doctors rated Mobic, the market leader brand, as statistically significantly superior over its competitors on only four out of the nine. These were on the promo activities of: (1) doing the most regular visits to doctors, (2) doing the most frequent detailing, (3) doing the most product sampling, and (4) doing the best doctor PR.

What do these results say about how to succeed or gain the highest market share in the NSAID category at the time this survey based competitive benchmarking study was conducted?

There are at least two competitive intelligence insights here. First is that Mobic attained competitive leadership by focusing on just on detailing and product sampling. Regular visits and doctor PR are variants of detailing. Secondly, competitive superiority is achievable without attending to all or even most of the available competitive activities. It is focusing that made for the strategic difference.

As you can see, you can learn and monitor competitors and their competitive strategies without directly sourcing data on them. Surveying our common target customers presents the best competitive intelligence source and at the same time is the most ethical approach.

In ethics, nothing beats the old golden rule: do unto others what you want others to do to you. As a reference for business ethics, a good resource would be John Maxwell’s book, “There’s No Such Thing As ‘Business’ Ethics (There’s Just Ethics).”

Competitive intelligence that does not cross ethical lines

THIS IS THE RESPONSE TO A READER’S second question, “Is there a way to short list the vast number of data your CIS requires on competitor capabilities as a way to predict a competitor’s future strategy?”

We have found that the key is to have a focus. Here’s the logic we apply to this search for a focus: “None of a competitor’s physical, technical, financial and marketing resources and capabilities can make for a competitive difference and advantage without someone orchestrating, navigating and controlling them.” So what is the implied focus?

Know your competitor’s face. Who is the brand manager, the marketing director or the marketing VP of your major competitor? What is he like in responding and/or attacking his brand’s leading competitor brand/s?

To know your competitor’s face and answer the preceding questions, it’s obvious that you have to profile this person’s competitive style. In our competitor profiling experience, we have found at least four competitive styles.

The first is what we call “the indifferent competitor.” This competitor will respond to you with this almost complacent mindset: “I have loyal customers and they’ve stayed that way for a long time. As long as I do everything to keep them loyal, that’s my best protection against any competitor.” So what can you predict about how this competitor will react to your moves? Most obviously and most likely, no reactions will be forthcoming at all.

The second competitive style is the “Hamlet” competitor. This one will respond but he or she will do so after a long, long time. This competitor’s brain works like Shakespeare’s character, Hamlet, and therefore thinks this way: “To compete or not to compete. That is the question. … But maybe it’s better to wait. In 80 percent to 90 percent of the cases, nothing really bad comes out of these competitor moves. So most of the time, I’m better off waiting things out.”

So what can you predict about how this competitor will react to your moves? It’s likely that the reactions will come after a long period of time.

The third competitive style we’ve seen is in a “game, fun-loving” competitor. This competitor looks at marketing life as a game of fun. He or she expresses this outlook along this script: “I love this competitive game. That’s especially fun when I’m playing against a worthwhile adversary who knows what he’s doing. At first he wins, and I lose. But I learn why I lost and come back. Then I win, and he loses. He learns, and then he comes back. And the cycle repeats and afterwards, we both are better off as competitors than at the start.” So we ask again: What can you predict about how this competitor will react to your moves? Most obviously, smart and sometimes surprising reactions will be forthcoming. So prepare and be equally smart if not smarter.

The fourth type is fearsome— “the ruthless competitor.” We say this competitor is fearsome because his or her competitive brain cells reason out this way: “My response rule is simple: It’s always better to overreact than to under-react or wait. My attack rule is just as simple: You don’t just hurt competition. You come in for the kill. Annihilate the enemy.” What can you predict about how this competitor will react to your moves? It’s obvious—be extra careful unless you have the guts and resources to go to war.

Are these competitive styles consistently practiced by their advocates? What we’ve observed it that they change over time and according to the situation. Even an indifferent or a Hamlet competitor can at times take on a ruthless competitive style because of a traumatic experience.

But in all these, what you must now keep in mind is this basic proposition: “In dealing with the issue of a competitor’s future strategy, remember that a leading competitor will usually do what he/she has gotten used to do in the past, shaped or reshaped, directed or redirected by that competitor’s current or changed competitive style.”

Keep up with emerging competitive intelligence practices and trends. For this, you may want to every so often visit the web site of The Society of Competitor Intelligence Professionals (SCIP):www.scip.org.

Send questions to MarketingRx@pldtDSL.net. God bless!

Seven resolutions for marketers in 2007

BY the time you read this column, you (like millions of other people across the globe) would have made a handful of New Year’s resolutions.

Here are seven suggested resolutions that marketers can make and KEEP to have a better, more profitable new year in 2007.

As a marketer, why not resolve to …

1. Start or continue practicing “Truth in Advertising.”

Make this one of your core values. Focus on telling the true benefits of your product to build trust with your customers. Quite a number of developers and/or their ad agencies state that their project locations in the Cavite / Laguna / Tagaytay area are a mere “45-60 minutes” drive to Makati City. Immediately, this creates disbelief and distrust for those veterans who ply the South ‘Suffer’ Highway. I have personally timed the travel to several of these projects and it is almost impossible to make it under 60 minutes. Just tell the truth and say something like “average travel time is about an hour or two, depending on traffic conditions, but it’s well worth the drive.” As BrandChild author Martin Lindstrom says, “to build word of mouth (the best form of advertising), underpromise but overdeliver.”

This brings us to a question that a reader asked: “If consumer perception is the primary basis for motivating prospects to buy, then does this mean that truth in advertising is irrelevant in marketing? ”

To which we answered: On the contrary. What this means is that marketers ought to be extra careful in their use of consumer perception to motivate consumers via their advertising. As a marketer you can use consumer perceptions for a good purpose or for a bad one. Truth in advertising is a good purpose. Deception is bad and if you get away with it at first, it won’t last. Consumers will, sooner or later, find out how you’ve been fooling them. Abe Lincoln has been, is, and will be right: “You can fool some of the people some of the time. But you can’t fool all of the people all the time.” (Read Seth Godin’s book, "All Marketers Are Liars: The Power of Telling Authentic Stories.")

Deception of course includes cases of keeping quiet about what you know may harm consumers. That’s withholding of a “truth.” Take the case of Merck’s Vioxx, the acute painkiller and anti-arthritis medication, that had to be withdrawn from the market because Merck or more precisely its medical researchers withheld from publication in the New England Journal of Medicine knowledge of three heart attacks among Vioxx’s patients participating in the large scale clinical study of Vioxx.

The heart attacks took place in the final five weeks of the trial study. The patients who had the heart attack were supposedly at low risk for heart problems. But this was not the only thing the Merck researchers withheld. The study had apparently found “more cardiovascular problems potentially connected to Vioxx.” These problems were not reported in the published study. They should have been since in medical science and research, such withholding is highly unethical and a serious breach of the Hippocratic oath.

In pharmaceutical marketing, published clinical studies are a powerful “advertising” material for persuading doctors. So that withholding of the three heart attacks and the connection to more cardiovascular problems was also a truth in advertising infraction.

2. Grow bigger by going after “smaller” markets.

Today, market niches are all around you ... even in the mass market. Look at Unilever’s deodorant brand, “Axe.” This brand successfully made sales and profit by nicheing into the population of young men, not all of them, but only those young men who are “after a deep relationship with a girl.” That’s a niche, a small population size. But their usage frequency is high and willing to pay a premium for a deodorant specifically tailored to their needs. We understand from our Unilever friends that it is now the main contributor to the more than 10 percent growth in the company’s participation in the deodorant category! There’s a local equivalent (though in a different category) to Axe. That’s Eskinol’s “Master,” the Eskinol for a special niche of young men.

The extreme in market niche-ing is in real property marketing. Look at Ayala Land. Its initial target market was the niche of all niches: the very few and countable Class AAA consumers. Yet selling to this niche, say, a less than 100-unit condo project gave Ayala Land billions in revenue. The magnitude of the marketing task (MMT), another marketing concept worth your mastering, is accountable and manageable.

3. Focus!

It was a joy to host marketing legend Al Ries and his daughter/partner, Laura Ries, last June 2006. One of the most memorable pieces of advice that they gave was to focus.

Al Ries’ advice on choosing what to focus on is that “First, you want to be first in a category. Remember, not just first in manufacturing the product, but first in the mind of the customer. It doesn’t matter if a hundred of people are producing it already, if you are first in mind you will generally win. Second, you want to bet on the future. Pick ideas or concepts that fit in with future trends. In food, for example, you might want to focus on low-calorie products. In clothing, you maybe want to focus on the younger generation, because they buy more and will be around longer. Third, you want to be the opposite of the leader. If the leader is Coke and focused on the older generation, then Pepsi should focus on the younger generation. If the leader is McDonald’s and focused on kids, then Burger King should focus on adults, or grown-up kids.”

4. Put effort into internal marketing.

We hate to sound like a broken record, but this resolution is one of the most favorite ones to be broken every year. Before you market and sell to the world, make sure you’ve sold yourselves and the other departments/teams in your company on your product and its marketing plan.

Marketing to the target market and consumer segment is what gets formally planned. That marketing is what has come to be called “external marketing.” But every company has its “internal customers.” These are the people in the marketing and sales department, and those in the other departments including especially, manufacturing, supply chain, finance, and human resources. To win their support, these “customers” need to be sold to the company’s product and marketing plan. They must buy in if the external customers are to likewise buy and if the marketing plan is to gain the support it needs from them. This is marketing to the internal customers. It’s “internal marketing.” If it is to succeed, it needs the same kind of formal planning, implementing, monitoring and control that we routinely give to external marketing.

We’ll be back next week for the next three resolutions that marketers need to make.

Seven resolutions for marketers in 2007 - Part 2

APOLOGIES to our readers for the delay in publishing the second and last part of this series. Here it is! Thanks for your patience.

As a marketer, why not resolve to…

No. 5. Build your brand by putting more time and resources into Public Relations

Resolve to read "The Fall of Advertising and The Rise of PR" by Al Ries and Laura Ries, a controversial book that was -- or still is -- a wake-up call for an advertising industry obsessed with winning creative awards. PR practitioners, of course, love every page of this book.

Why put more money into PR? Ries and Ries build the case that PR builds brands because it is more credible than advertising. People tend to believe the stories they read or hear more than the advertising that “interrupts” their reading, viewing, or listening.

Here’s Al Ries’ advice:

“Over several decades, advertising has gotten more expensive at the same time as there has been a dramatic increase in the volume of advertising. These two factors make advertising less effective (too much volume) and less efficient (too expensive.)

Advertising agencies have responded to this problem by de-emphasizing selling and emphasizing the creativity of the advertising. As long as everyone was aware of a company’s advertising what difference did it make if nobody bought the client product, went the thinking. Selling is not our problem, said the advertising industry. Creating awareness by creative advertising is what we are all about.

Advertising has many advantages: You can reach exactly the right people at the right time with the right message as often as you want to reach them.

But advertising has one major problem. Advertising lacks credibility. People just do not believe what they read (or see or hear) in an advertisement. They recognize the fact that advertising is self-serving. What you say about yourself has little or no credibility. Contributing to the credibility problem, of course, is the volume of advertising. Consumers turn off most advertising because there is just too much of it. In many ways advertising is like spam on the Internet. It’s not believable because there is too much of it and the messages are self-serving.

Public relations or PR has many disadvantages. You can’t control the media, you can’t control the timing, and you can’t control the message. But it has one major advantage: PR has credibility. Consumers tend to believe what they read in the editorial pages of newspapers and magazines and what they hear on radio and television from independent people. It’s what we call “the third party effect.” What others say about you has credibility.

PR and advertising can work together. Use PR first to create credibility for the brand. Then use Advertising second to reaffirm and reinforce that credibility.

We recommend that companies launch new brands with PR only. Then when the brand has awareness and credibility in the mind, the company can switch to advertising to maintain the brand.”

No. 6. Stop being fooled into buying awards to build your brand

Winning awards for your company or brand can be very good PR for you. But it’s funny how thousands of companies, both large and small, can be duped into buying awards. In the past year or so, we’ve seen good reputable companies emblazon on their print ads and brochures the dubious logos of such awards that were practically sold to them.

Other “entrepreneurial” deviants, determined to make a quick buck, have joined the bandwagon of selling awards. In the past few months, we’ve been getting faxes and calls from these deviants congratulating us on our accomplishments. Now would we mind paying the “joining fee” to participate in the awards program? Ha, ha, ha.

Legit or just moneymaking?

Because of the current proliferation of these business and marketing awards, a good number of our marketing friends have asked: “Is this award legit?”

It pays to do a little checking into the award giving body, company, or so called “Institute” before joining. Many bodies do organize awards for both fund raising and recognition but are definitely legit. Take, for example, the Clio advertising awards in the US or the Araw Awards that accompany the Philippine Ad Congress. Every entry pays a fee that isn’t exactly cheap. But participating ad agencies don’t seem to be bothered and no adverse negatives are heard about the award’s required entry fee. Of course there are awards where the entries do not pay but are instead “paid” to those nominees who win as in the case of the most prestigious award in the world: the Nobel Prize (Winners get a $1M check). The Ramon Magsaysay Awards, known as the Nobel Prize of Asia, does the same thing but the check is in pesos—about P1M. These are the “Superbrands of Awards.” Their branding carries the name of their founder who is known and acknowledged for his or her life of excellence and professional and personal values.

Awards for sale

We’ve received some concerned calls from company heads and marketing professionals who have been receiving what look like generic form letters from awards program organizers. The letters inform them that based on "consumer surveys" their brands have been selected as a winner in a category. Some of these shoppers/brand/marketing award promotional campaigns then ask for a P15,000 to P50,000 award support fund/subsidy. The “leading” solicitor of such awards for sale has a team of account executives. They in turn “sell” thousands and thousands of awards on a local/regional and national level and asks awardees to shell out at least P15,000 for a plaque and the right to use the award logo on their marketing collaterals. Do the math—that’s a cool P15M for every thousand awards that you give!

According to one respected but skeptical marketing professor, the difference is that these awards programs inform you that you have won already and to participate in the awards program and to include your brand name in the subsequent advertising and promotions, all you need to do is return the contract that accompanies the congratulatory letter together with your "support fund" or "subsidy."

“What they are doing are selling awards to companies!” says the marketing professional who received several awards confirmation letters for his brand but refused to pay the award subsidy/fund that was asked of him.

No. 7. Keep on learning

We always end our MarketingRx New Year’s resolutions with this one and we see no reason to change or replace it. As a marketing executive, you must have a personal growth plan to be a better, more effective marketer. Keep on reading the best and latest books, journals, and articles on marketing. Go back to “school” by attending marketing seminars and conferences here and abroad. Marketing is one of the most challenging careers characterized by constant change. To rely on what you learned about two years or a year ago is business suicide. Keep on learning and you’ll have a really prosperous new year!

What to do with ad budgets when sales are down

QUESTION: How do we decide on our advertising budget? As they say, you spend what you earn. In 2006, one of our brands performed poorly. So this year, its ad budget is very small, so small that it’s impossible to support production of a TV material. How should we address this problem?

Answer: First, resolve for the New Year that you will no longer make marketing decisions according to “rules of thumb.” Rules of thumb are convenient decision shortcuts that enable us to cope with difficulties including decision challenges. But when they are based on assumptions that are no longer current, they obviously lead to wrong decisions.

This is true when deciding on your advertising budget as a percentage of your sales.

The rule of thumb is: “When sales go up, up goes your ad budget as well. When sales rise, down goes the ad budget as well.” Most of the time, it’s the reversal of the rule that is appropriate.

When sales go down, that’s when your product needs more support from your advertising to help move up sales.

Remember, advertising is one of your marketing mix tools for generating sales. Advertising is a means. Sales are an end. When you say the ad budget should be a percentage of sales, you’re saying the end should determine the means.

As one of your sales generators, any specific ad campaign has marketing functions you want it to perform, like raise your brand awareness by so much, brand image rating by so much and purchase intention for your brand by so much.

You have norms or you can get industry norms for each of these functions and you can benchmark on how much an average ad campaign will cost to undertake each of those functions.

This is the more logical basis for deciding on your ad budget.

Q: How do we properly segment the market for our products when the buyers are mothers but the end users are their children? Whose (product priority) value do we prioritize?

A: Your product category represents the case where the decision-maker or the buyer is one person, namely the mother, while the end-user is another, namely the child. It’s a family product and not an individual product.

Marketing 101 tells us that in such a case, you should respect the differing priorities of your two consumers, the buyer and the end-user.

Take the case of Sustagen when it was relaunched in the early 90s to compete against Milo and Ovaltine. Sustagen’s research revealed that it was in exactly the same situation as your product. The decision-maker and buyer was the Mom. The end-user was the child. The same research showed that the priority value of Mom for the chocolate drink of her child was “nutrition” while “taste” was a secondary value. The child’s priority was almost exclusively for a “yummy taste.” To the child what was yummy must be nutritious.

So what does Marketing 101 mean when it says you ought to respect these differing (and in this case, diametrically opposed) priority values? That simply means that in your communication with Mom, you support and reinforce her priority favoring nutrition. And that’s exactly what the Sustagen TV ad campaign did. It converted the TV into a nutritionist who announced that she’s better off giving her child Sustagen with its 23 “'resistensya' [resistance] builders.” On the other hand, in its communication with the child, another TV ad talked to the child about Susy and Geno, who told the child how to concoct his or her own tasty Sustagen shake.

Was that the right move? Marketing 101’s recommended GMP (Good Marketing Practice) was vindicated.

Q: My daughter, who’s taking up Integrated Marketing Communications, surprised me when she said the 4Ps are out and 4Cs are in.

Here’s the correspondence: product, out; consumer values, in; price, out; consumer costs, in; place, out; convenience, in; promotion, out; communication, in.

Is this true? What’s this 4Cs concept?

A: That’s one of the things daughters are for: to surprise us. Sometimes, they surprise us with the truth and a new reality.

But the 4Ps and the 4Cs are basically the same. Both are about the marketing mix. The 4Ps are the marketing mix components seen from the marketer’s perspective, the marketer’s decision tools for generating sales. On the other hand, the 4Ps are the marketing mix components now seen from the consumer’s perspective, the consumer’s decision considerations for making purchases. Remember, consumer purchases equal marketer sales.

The concept of the 4Cs as the consumer-centric marketing mix came when the “marketing concept” became and was accepted as the single most fundamental marketing principle. This concept simply said this: “In planning or implementing any marketing program, be it a product intro, pricing, an ad campaign, a consumer promo, or even a trade promo, a sales distribution program, never start from where you (as the marketer) are. Always start from where the consumers are.”

This is not of course saying that if you do marketing according to the 4Ps, you will go wrong. If your specific 4P decisions converge with where the consumers are with each of your 4Ps, then your marketing mix will still work. It is when there is divergence between the two that the 4P-driven marketing mix or program will fail or won’t get results as good as when convergence is present.

Just consider our Sustagen example above. The marketer-driven 4Ps concept was about choosing between the Moms and the children as alternative PTM segments. That’s because the Sustagen positioning will be different if the PTM segment is the Moms and if it’s the children. Looking at the marketing decisions from a consumer-driven 4Cs concept told us that the PTM segment decision is not a choice between alternatives. The two segments are the PTM segment because Mom will not buy a chocolate mix that’s not nutritious. But the child will not drink (many or most of them won’t) a chocolate mix that’s not yummy. And if the child does not drink, Mom will stop buying. The problem solution is clearer and more compelling in the 4Cs problem definition than in the 4Ps specification.

Of course, the marketing reality does not always work out in favor of the consumer-driven marketing. In a previous column, we spoke of consumer-driven marketing. That’s the 4P marketing or marketer-driven marketing. We’ve seen that with the phone companies and their very successful marketing and selling of SMS services and ring tones, to mention just two. Here, it was the marketers who taught the consumers that they needed SMS to stay connected with their loved ones. Consumers didn’t tell the phone companies that they have a need for SMS. The process didn’t start there. It started with the marketers. And when the consumers finally learned what the marketing phone companies were teaching them, and were finally convinced, they bought and revenue literally exploded.

So tell your daughter her IMC professor is probably trying to teach through shock value through exaggeration. Tell her not to go for a half-truth but instead go for the whole truth and nothing but the truth. So help us God!