** Tig's weekly column fields questions from and for marketers. Got a question for Tig? Email him by clicking here. **

 

Dear Tig,

I am the group marketing manager for an African milling company, processing and marketing products such as rice, sugar, pasta and biscuits. We sell primarily in the neighboring countries in Southern Africa. Do brand extensions work?

Regards, Starchy

Dear Starchy,

Brand extensions do work in many circumstances, but we should consider the benefits and costs.

Often, a brand extension is created in order to split a market up into segments. This may be for messaging purposes (“tastes great” to kids and “eat healthy” to adults) or it may be to exploit the fact that a subset of the audience is willing to pay more for the product. In such a case, a new, higher-end brand is created in order to collect this money that previously went uncollected.

In this age, where quality and price of product matter less than distribution relationships, a brand extension may also be used in order to deliberately force a competitor's brand off the shelf. A company that owns the dominant brand of a product can become the only brand, if it can convince distributors to replace its competitor with its new brand extension.

But this presumes a fairly efficient distribution system. In the United States, transportation and logistics facilities are developed enough to allow for frequent restocking of many brands. This isn't the case in many countries, and in these places there is a much greater need to reach a certain economy of scale before a brand extension can make sense.

Presuming you can charge more for the brand extension, that you may experience greater market share by forcing someone else off the shelf, and that the costs of distribution do not exceed these benefits, then such an extension may make sense.

Of course, there are all sorts of other overhead items to add to the costs, such as staffing, marketing and all the other elements that your current brand incurs.

 

Dear Tig,

Do you know of studies that can show the demographics of email users? My boss does not believe that C-level execs read email. I need SOMETHING to prove him wrong.

Please help, Stephanie

Dear Stephanie,

There are a few studies you can peruse (see below), but I thought it might be useful to relate some personal experience as well.

I can't count the number of times I've been sent on various forms of a wild goose chase, all caused by an email that a CEO received. Had I my druthers, CEOs would be disallowed from having email accounts, but such is my place in the world that no one ever consulted me.

I can attest that not only do CEOs, CFOs and COOs read email, but that they often have the annoying habit of investing much greater authority in information that came to them over their personal email.

The trick, of course, for conducting email marketing to these high-level executives is finding an appropriate list. These are not easy people to find.

I remember one client of mine that was determined to use email and other forms of online marketing to reach CFOs. I found myself recommending against it when we figured out that we would be spending about $10,000 for each of the Fortune 40 CFOs that we reached.

My impolitic suggestion at the time was something along the lines of, “Why don't we just knock on their doors with one of those over-sized checks for $10,000? That would certainly get their attention.” It wasn't an account we kept too long.

Anyway, the following links should enlighten you as to email demographics, the first two with information specific to CEO-types:

E-Business Continues to Mystify Executives
CEOs Report Using More Online Resources
NUA Surveys
Big Picture Demographics

Dear Tig,

I have read a lot of articles about Generation X, Generation Y, Baby Boomers, etc. Could you please tell me their origin and their relevance in marketing?

Thanks, Inquisitive

Dear Inquisitive,

Up to the 1950s, the relatively recent (really starting in the 1880s) practice of using demographic information as a basis for targeting media and determining creative messages made a gross assumption. It assumed that people moved up and through demographic changes in a consistent manner.

A man who bought a certain kind of dental powder in 1910 as a 20-year-old was assumed to acquire the tastes of a contemporary 40-year-old by the time 1930 rolled around--perhaps switching brands, or at least purchasing a brand for a different reason.

But after World War II, marketers began to see that the vast differences in how people grew up relative to the pre-war environment had significantly changed the attitudes of audiences. This “Baby Boom” generation is notable not so much because of its outsized proportions, but rather because of the time in which it grew up and the changes that afflicted that generation as a result.

Once this trend was realized, marketers started a practice whereby they tried to associate general characteristics to people born in a certain era, assuming that they might be quite different as 30-year-olds than previous generations.

Occasionally, some researcher somewhere writes a book about such a glob of people, and the name sticks. Generation X was born so, as was the very derivative Generation Y.

A part of these definitions appeal to the conceit of those in the class. The main difference between Generation Y kids and the Generation X kids was the fact that the Generation Y people would think it terribly embarrassing to admit that they were just like Generation X (their parents).

The very best example of this mechanism is the Pepsi ad that just aired on the Superbowl. A Pepsi-drinking man who looks to be somewhere between Generation X and a Baby Boomer is found by his son near a concert's mosh pit, evoking horror and disgust in the child (and the implication that drinking Pepsi makes you feel younger).

The generalizations are gross. The differences between these mega-classes are subtle. The benefits of marketing in terms of generations: nominal. The benefits of appealing to a generation as a coherent entity, implying that they are part of a greater whole: worth exploring.