How useful is trend spotting to marketing planning?

(Part 2)

In last Friday’s column, we tackled the issue of how to manage the highly unpredictable, near-zero visibility future. We cited the Lebanese statistician, Nassim Taleb, who wrote an entire book to address this issue in his 2007 best-selling book “The Black Swan: the Impact of the Highly Improbable.”

According to Professor Taleb, if you cannot predict the unpredictable it’s a waste of time to keep on predicting. He recommended that you give your time instead to preparing. The question of course is prepare for what? Professor Taleb says to prepare for the consequences of what happens should the highly unpredictable take place.

Consequences are easier to know because all unpredictables have happened before. What’s hard, often impossible to know is when and how the highly unpredictable will happen or happen again. Now, there are two basic kinds of the highly unpredictable. There’s the “positive unpredictable” and the “negative unpredictable.” When a positive unpredictable future occurs, its consequences are beneficial. Last Friday, we talked about how to prepare should a positive highly unpredictable happen. We said that for this Friday, we will deal with how to prepare if a highly but negative unpredictable takes place.

When a highly unpredictable future that is negative occurs, its consequences will be harmful and even profoundly harmful. Take the case of what happened to Procter & Gamble’s market launch in April 2000 of its “Fit Fruit & Vegetable Wash.”

Fit promised its target consumers research-based priority consumer product values such as: “removes in fruits and vegetables during washing up to 93 percent of wax from sprayed pesticides and fertilizer plus 95 percent of handling residues.” Compared to washing only with water, Fit was “98 percent more effective in removing whatever pesticides stayed in your fruits and vegetables.” Practically everyone agreed that its market introduction in April 2000 was perfectly timed. That’s because practically all consumers have been made conscious by DOH about our contaminated tap water and by Department of Agriculture regarding the dangers to health with the extensive and intensifying use by commercial farmers of pesticides and fertilizers.

But after less than a year from market launch, P&G withdrew Fit from the market. Too many consumers rejected Fit after trying it. Apparently, there were lots and lots of trial purchases. That was highly predictable because of its heavy promo and TV ad support. But consumer repeat purchases were too low to make up enough repeat base from which to project eventual sales take off. P&G follows a simple but practical market entry rule that says, “If sales are not likely to come, then cut our likely losses early; withdraw and throw back to R&D for weakness correction and relaunch once corrected.”

How could the Fit brand manager or P&G Marketing have known the likelihood of this market rejection and, more importantly, how could P&G have prepared? Predicting the likelihood of market failure is a function of product testing. Inside P&G, we were told that it was known from the Fit product tests that there were noticeable percentages of consumers who mentioned a product negative. After washing with Fit, these respondents were heard saying: “It’s like exchanging one type of germ for another.”  That came from what Fit-using consumers felt after the washing. Most felt that after washing, using Fit left a thin layer of slimy mucus around the washed fruit or vegetables.

Apparently, since the percentages of consumer belief on Fit’s positives were larger than its perceived negative, we were told that the brand manager decided to, as the song says, “accentuate the positive” and ignore the negative. It’s now clear from hindsight that a perceived negative like what consumers felt in Fit should not be ignored. The revenue-damaging consequences of its being brought up by consumers themselves after the product’s market intro are there to acknowledge, and more importantly, to prepare for.

How then to prepare? In the case of a positive highly unpredictable happening, the way to prepare we learned last Friday is basically to maximize your exposures to the positive unpredictable happening so that the chance of benefiting from the positive unpredictable will also have a high likelihood of taking place. Just like in the case that we saw last Friday. The case was about Arnel Pineda’s discovery as lead singer of Journey. In the case of a highly unpredictable but negative happening, the preparation is in the opposite direction: minimizing instead of maximizing. Minimize or mitigate the negative consequences. As the case of Fit illustrates, minimizing the negative consequences of revenue loss was by “cutting our loss early by withdrawing the product from the market.” It’s like Warren Buffett, known to many as the “world’s greatest investor,” who advised that when stock prices are down, “If you find yourself in a hole, stop digging; get out.”

But there’s not just one how-to-prepare or how-to-mitigate negative consequences. There are many. They are a function of your creativity and your sense of innovating. As an exercise on your creativity, try your hand in thinking about preparing for how-to-mitigate the negative consequences in each of these two known cases. One is business but the other, personal. That’s saying the insights we’ve discussed have usefulness in both your business and personal life. Here are your two practice cases:

1)  What happened to the preneed insurance plan of Legacy Consolidated.

2)  What happened to Katrina Halili and her Hayden Kho affair.

Keep your questions coming. Send them to us at [email protected] or [email protected]. God bless!

To discover how to get mentored by Dr. Ned, visit www.NedMarketingAcademy.com.