Change Agent March 2005 - pink dollar

CHANGE AGENT
THE MARKET RESEARCH MAGAZINE THAT IS DRIVING CHANGE IN GLOBAL BUSINESS – ISSUE 4 / MARCH 2005

CHASING THE PINK DOLLAR
TARGETING TRENDS AND OPPORTUNITIES IN AMERICA’S GAY AND LESBIAN MARKET

ARE YOU EXPERIENCED? 16
Pushing the boundaries of luxury

SOUND & VISION 22
The lowdown on download

IS THERE A TECHIE IN THE HOUSE? 28
Medical records go high-tech

CHANGE AGENT
THE MARKET RESEARCH MAGAZINE THAT DRIVES CHANGE IN GLOBAL BUSINESS EDITORIAL TEAM
ALICIA KAN Founding Editor PAUL EHRLICH Managing Editor EMILIO RIVERA III Design Director DAVID WONG Senior Writer

EDITOR’S NOTE

TRENDSPOTTING

CONTRIBUTORS
MICHAEL CLEMENTS PAM DANZIGER NICOLA DOYLE JACKIE ILACQUA BRIT-INGER LUSTIG-BREMER IAN MAGGS NICK RAMAN MICHAEL SPEDDING GRANT THATCHER REBECCA WEBER

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ith 2005 already well underway, it’s time to look at some of the major trends that will be driving the markets this year and beyond. In this issue we set our sights on one of the world’s largest markets, the USA, a country of some 300 million consumers. Among those consumers is a relatively overlooked population valued in the hundreds of billions of US dollars. In recent years, the gay and lesbian community has undergone dramatic change, coming out as an affluent, mainstream market with high-purchasing power. More gays are living as couples and with children, and gay celebrities are becoming spokespeople for major brands. In our cover story, Rebecca Weber looks at how marketers and advertisers are reassessing strategies of how to approach and tap this market of nearly 17 million. Sometimes, though, selling a brand or product isn’t quite enough in the everchanging, ever-fickle consumer market. As luxury goods are increasingly within the reach of a wider group of people – anyone can walk into Louis Vuitton or a secondhand shop and buy the bag of the moment – affluent consumers are seeking the next level of luxury: the experience. Nicola Doyle takes us into this experiential world of overthe-top gratification. The lap of luxury was never so luxurious. Another market that is changing its tune is the music industry. Paid-for downloads, once the bane of the music label industry, are now helping to reshape how labels can reinvent themselves. Michael Clements provides the lowdown on how downloading is causing the music industry to reinvent itself. A transformation is also taking place in the health industry. In the story “Is There a Techie in the House?”, we look at the important benefits of electronic medical records. We also analyse how the latest US election was more galvanising than cat litter. Voters seemed more passionate about the players than in past elections. And we turn the camera on viewers glued to the boob tube to watch how they watch TV. ▲

PUBLISHING AND BUSINESS TEAMS
ALICIA KAN Publisher [email protected] BJORN FJELDDAHL Publisher [email protected] CHRIS BAKER Advertising Director [email protected] ALIENA LAI Circulation Manager [email protected] Have a great idea for CHANGEIAGENT? Contact us and tell us what you’re thinking! EDITORIAL OFFICE 21/F, East Exchange Tower, 38 Leighton Road Causeway Bay, Hong Kong Tel (+852) 2892 1322 Fax (+852) 2893 0320 www.eightpublishing.com SUBSCRIBE: www.synovate.com/changeagent FEEDBACK: Dave Wong [email protected] ADVERTISING Chris Baker [email protected] Tel (+852) 2836 8910

Respectfully,
Change Agent is published by Eight Publishing Ltd. on behalf of Synovate Ltd. All rights reserved. This publication may not be sold. No part of this publication may be otherwise reproduced, adapted, performed in public or transmitted in any form by any process without the prior authorisation of Synovate Ltd. ©Synovate Ltd., 2005. The articles in Change Agent do not necessarily reflect the views of Synovate.

ALICIA KAN EDITOR

MARCH 2005 CHANGE I AGENT 3

ESSENTIALLY...
CHASING THE PINK DOLLAR
Tapping into the multi-billiondollar gay and lesbian market

10

Preparing for the “Pink Event”

BLUSHING BRIDES

13

MEET THE PARENTS
Who is parenting who?

26

. . .IN THIS ISSUE
BRANDING THE PRESIDENT
Voters feel passionate about their candidates

8

EDITOR’S NOTE TREND AGENT MISSION REPORT CUTTING EDGE OPEN MIND FIGURATIVELY SPEAKING HEALTHCARE RESEARCH RESOURCES

3 6 8 9 21 26 28 30

SOUND & VISION
The internet is changing the music industry’s tune

22

ARE YOU EXPERIENCED?
Luxury takes off to the next luxurious level

16

9
PICTURE THIS
Photo opportunities for network operators

TREND AGENT
RESEARCH, STATS AND ALL THAT

DON’T JUDGE A BOOK BY ITS LOVER
Looking for a lover, but not sure which section to browse? Check under fiction at your bookstore. According to a survey of 1,003 New Yorkers aged 25 to 35 released by American Express, bookstore chain Barnes & Noble has the best singles scene in the city. Spokeswoman Mary Ellen Keating says: “We’ve had requests from people who met in our stores to be married in our stores.” ▲

WEEKEND WARRIORS CRUEL BRITANNIA
Feeling British no longer helps bind Britons together. People in Britain are far less likely to feel pride in being British than they were 20 years ago. In the early 1980s, a majority (around 55%) said that they were “very proud” to be British. Now, little more than 40% have that feeling. As one of the authors of the paper, Anthony Heath of Oxford University, points out, “As older generations die out, the ‘glue’ holding the different parts of the UK together is likely to become weaker.” ▲ Work outside the traditional nine-to-five, Monday-to-Friday week is the norm for many British parents, according to studies carried out by British research company NatCen (the National Centre for Social Research). Research found that one in three (2.41 million) families with children have a parent who regularly works at the weekend. Among families with at least one working parent, this proportion rises to four in ten. Although the majority of weekend working involves Saturdays, a significant number of parents also work regularly on Sundays. The research also found that more than half of parents who regularly work on weekends also work in the evening, while a third work shifts or at night. Weekend workers also tend to work very long hours. Those who work on weekends are more likely to be found in particular industries, most notably agriculture and fishing, hotels and restaurants, wholesale and transport. ▲

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IGIT OUS D

ARE YOU SEEING WHAT I’M SEEING?

A recent study by Synovate takes the concept of reality TV to a whole new level. One of the best received papers at the Cable and Satellite Broadcast Association (CASBAA) Convention held late 2004, the study undertook a ground-breaking piece of media research in Asia Pacific. Titled A Day in the Life of Your Pay TV Viewer, the pilot study looked beyond traditional television viewership figures to literally see how audiences relate to the medium. Cameras mounted atop TVs enabled researchers to watch families watch TV in Hong Kong, Singapore, Kuala Lumpur and Bangkok. This provided a clear picture of not just what they are watching, but how they watch. Do they pay attention or do they chatter? Are they channel surfing or fighting over the remote? The findings are very relevant for anyone who uses the medium to advertise. Are there times of the day that are better or worse to spend your ad dollar? The paper generated huge interest and Synovate is now considering rolling out the study across the region. ▲

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METRO SAPIENS
Film star Orlando Bloom has taken David Beckham’s crown as the King of Cool, according to a new study that confirms that metrosexual men are the new role models for young males in Asia Pacific. The study across 14 countries by ad agency McCann Erickson asked 16 to 21 year olds to nominate “who is cool”. In local and international markets, “metrosexual” men were the heroes – guys who are wellmanicured and fashion conscious. Film actor Orlando Bloom, who has starred in the Lord of the Rings trilogy, Pirates of the Caribbean and Troy was named most popular international star in seven of the 13 markets. Soccer star David Beckham appears among the most popular in six markets. Also high on the cool list is Bloom’s co-star in Pirates of the Caribbean, Johnny Depp. “While Beckham’s soccer talents and personal style have made him a global icon, major movies and TV programming like Queer Eye for the Straight Guy and reality TV have driven interest in the metrosexual style to inspirational levels. It’s a phenomenon that’s accelerating in Asia Pacific as these types of shows are rolled out across the region,” says McCaughan, director of consumer insights at McCann Erickson Tokyo. The most admired females are all pop stars. Avril Lavigne appeared in the most admired lists in four countries, Beyonce Knowles for three, followed by Britney Spears (2) and Stephanie Sun (2). “We also see a wide variety of stars who are cool because of the success they have achieved or the expertise shown at their craft,” says McCaughan. “For example, Microsoft CEO Bill Gates (in India and Hong Kong) for his rise to riches and Lord of The Rings director Peter Jackson for bringing the Tolkien trilogy to the big screen in such a spectacular fashion – are regarded as ‘cool’ for their achievements.” ▲

GREY AREA CODE
It’s a common perception that as populations age, they tend to relocate to more agreeable climates. But this traditional view of where senior citizens retire may no longer hold true, according to a recent Synovate study. The grey market, which represents people aged 50 and older, grows by 10,000 every day in the US. As more baby boomers reach this milestone, marketers are interested to see how they influence the aging process in America. Larry Levin, executive vice president of Synovate Americas, says that new Synovate research shows that people over 50 are no more or less likely to live in a particular region than the population as a whole. “We might find that people over 60 or 65 develop that pattern,” says Levin. “Maybe there are some natural segmentations within the grey market that we need to consider.” ▲

STRANGE AGENT

BY BEACH

MARCH 2005 CHANGE I AGENT 7

MISSION REPORT

BRANDING THE PRESIDENT
WHAT DID SPORT TRUCKS, LADIES’ LINGERIE, BUSH AND KERRY HAVE IN COMMON?

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ust as people may have strong leanings toward certain brands of soft drinks, automobiles, clothing or wines, they can do the same for political candidates. With regard to the recent US presidential election, “passion” is the buzzword for likely voters’ allegiances, based on the results of a Synovate study. This study was conducted by Synovate via its eNation service among 1,000 respondents in the US shortly before the 2004 presidential election. It revealed that the candidates were truly at the high-end of the scale when it comes to commitment. George W. Bush and John Kerry each had a very strong relationship with their supporters, with the Bush supporters being even more passionate about their candidate. This contrasts sharply with the election in which George Bush Senior ran a dozen years ago. At that time the presidential candidates evoked less passion than cat litter, which was one of the weakest categories ever studied. Although people felt that the election was important, they did not tend to have a strong bond with the choices then. In the 2004 election, however, the presidential candidates had relationships with voters that rivalled the strongest categories ever seen in Synovate’s brand equity research, including sport utility trucks and ladies’ lingerie. George W. Bush and John Kerry placed at the high end of the 100-point

scale on the relationship dimension. This dimension assesses the strength of the psychological bond that people have with choices. Bush and Kerry were at 98 and 96, respectively, among likely voters who supported them. This compares to an average of about 70 across categories. Another sign of zeal in 2004 was dislike of the opposing candidate. Supporters of Bush had a relationship score of just 26 for Kerry. Similarly, Kerry supporters generally disliked Bush, although a bit less, with a score of 32. The undecided were just that – undecided – with a score of 68 for each candidate. There were some stark differences across population groups. For example, the youngest respondents, those aged 18 to 24, were far more likely to have a strong relationship with Kerry, as were ethnic minorities. In contrast, people aged 35 to 64 and more affluent respondents tended to have a stronger bond with Bush. These demographic trends will be interesting to monitor in the years to come, along with the depth of the relationship that candidates engender with the electorate overall. The trends also set a benchmark for categories studied in our day-to-day research, with passion toward brands and services as a goal that pays off in actual marketplace behaviour just as these voters turned out for their candidates. ▲
For further information on Synovate’s brand equity research contact Elaine Howard ([email protected]).

8 CHANGE I AGENT MARCH 2005

CUTTING EDGE

PICTURE THIS
WHAT DO PEOPLE DO WITH THEIR CAMPHONES?
BY IAN MAGGS & BRITT-INGER LUSTIG-BREMER

MMS VS SMS

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PHOTO OPS

obody with eyes and ears could fail to escape the heavy hyping of Multimedia Messaging System (MMS) photo-messaging, especially as penetration of camphones is now approaching critical mass in the more mature markets. So with the stage apparently set for photo-messaging to come into its own, why hasn’t it happened yet? Why is MMS traffic trailing Short Message System (SMS) so dramatically that some industry commentators have written it off as a non-event? Between the summers of 2003 and 2004, Synovate worked with Sony Ericsson Mobile Communications to keep a watchful eye on emerging consumer camphone behaviour in the UK – and the findings should hopefully equip and inspire the mobile phone industry to secure a successful future for MMS photo-messaging.

Four main types of photo-message (sent by one method or another) were observed: fun photos (eg, “You have GOT to see this!”); social bonding photos (“Hi, how’re you doing?”); inspirational photos (“I saw this and thought of you.”); and factual photos (“So what do you think?”). The point is that while many of these photos are taken spontaneously, they don’t all need to be sent from the phone – rather, they can be downloaded to computer and emailed at a later date. Although different market dynamics were woven together in different ways in different countries, several conclusions can be drawn about camphone user patterns. Many of the core camphoners were on their second model and most viewed the integrated camera as a very important feature. As a result, there appears to be a continued thirst for new and improved camphone handsets.

As many also have a techie background, they are likely to experiment with the technology and share the photos that they take using MMS. However, this techie group is quite disposed to download their camphone photos to their computer and, as the image capture/display quality of camphones improves, it is likely they will do this more and more. The prediction? If network operators reduce MMS costs, this group will send more photo messages. If they don’t, they may actually send less. The challenge is to encourage spontaneity and make sure they don’t get out of the MMS messaging habit before they’ve even got into it.

Many camphone photos are spontaneous – but, as noted earlier, most photos don’t need to be spontaneously sent. The research strongly suggests that the lion’s share of photos taken are of the “fun” and “social bonding” variety, and that often the subject matter is not felt to warrant the current expense of sending by MMS. If every user were to send three photos a week instead of one, well, the implications are obvious. A knock-on effect is that sending a photo will often prompt an SMS dialogue, opening up new conversational possibilities. So what about the implications of improved image capture and display quality?The greater the camphone’s image capture/display quality, the more the respondents have enjoyed capturing and sharing their photos. This is valuable news for handset manufacturers. However, network operators must play this situation particularly carefully if they are not to get left behind by developments in camphone image quality. With everincreasing computer connectivity, the pull will no doubt increase on users to download their photos to computer and email them on from there. Equally, users will be more likely to simply “show” photos on their handset’s enhanced displays. Before these trends become too strongly established, MMS needs to stake its claim in the camphone user’s messaging repertoire. But what is an acceptable cost? The research indicates that the cost of MMS in relation to SMS is something of a lingua franca across markets – consumers will be content to pay somewhere between one and two times the cost of an SMS to send an MMS. The result is a market in which half the camphone owners are engaged and half are not. The half that is engaged is primed and ready to go. If network operators focus attention on releasing this pent up energy, of making photo-messaging a part of people’s everyday lives, then the revenue stream opportunities are very exciting indeed. ▲
Ian Maggs is director of International Qual, Synovate UK ([email protected]). Britt-Inger Lustig-Bremer is senior manager of product research and global product planning with Sony Ericsson Mobile Communications AB, Sweden.

MARCH 2005 CHANGE I AGENT 9

COVER STORY

CHASING THE
A DECADE AGO, IKEA RAN THE FIRST AMERICAN TELEVISION COMMERCIAL FEATURING A GAY COUPLE CHATTING IN THEIR NEW HOME. AFTER RECEIVING THREATS OF BOMBS AND BOYCOTTS, IKEA PULLED THE AD. HOW THINGS HAVE CHANGED. SAME-SEX MARRIAGE IS NOW LEGAL IN MASSACHUSETTS AND WELL-KNOWN BRANDS FROM CARTIER TO BUD LIGHT ARE TARGETING THE LUCRATIVE LESBIAN AND GAY MARKET

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PINK DOLLAR
BY REBECCA WEBER

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ith gay, lesbian, bisexual, and transgender (GLBT) issues now highlighted daily in mass media, it’s no surprise that mainstream marketers are taking note of a relatively untargeted audience (compared to other minority groups). Annual purchasing power for this affluent group with high brand loyalty was approximately US$485 billion in 2003, according to WiteckCombs Communications. “It’s a gold mine,” says Bill Duggan, senior vice president of the Association of National Advertisers, which added a gay/lesbian category to its multicultural excellence awards in 2004. Certain sectors already have keen competition for the pink dollar, including financial services, auto, travel, entertainment and fashion, but many others remain largely untouched. There has been a steady increase for a decade in the trends both of creating targeted campaigns for this market, as well as placing general interest ads in gay media. The sharpest spike in companies getting in on the game followed the smash debut of Queer Eye for the Straight Guy in 2003. Since many people won’t disclose their sexual orientation – and the US Census can’t ask such a question until the Congress mandates it, which is unlikely with the current administration – there’s no official count of GLBT Americans. Recent population estimates range from 13 to 17 million – that’s a larger demographic than Asian Americans and nearly half the size of either the African American or Hispanic population.

TARGETING THE GAY MARKET Firms should do their homework and put gay-friendly policies in place – not just because it’s the right thing to do, but because effective marketing and results will hinge on it, advises Howard Buford, CEO of Prime Access Inc – the ad agency that represents more Fortune 500 clients in the GLBT market than any other. When gay rights are reflected in company policies, consumers respond. A 2004 Harris study concluded that 24 to 37 percent of GLBT consumers affirm that “equal treatment of all employees, including gays and lesbians ranked as their third or fourth highest priority” when making purchasing decisions. A recent IBM ad shows a photo of six GLBT employees, and refers readers to its website where they can read about the company’s “GLBT highlights”, starting with 1984, when IBM added sexual orientation to its non-discrimination policy. GLBT consumers are far more likely to patronise companies that demonstrate support of the community, such as those that run targeted ads in gay and lesbian media (39 percent) or that make contributions to gay causes (46 percent), according to a Witeck-Combs Communications/ Harris Interactive study. “They want their lifestyle recognised as appropriate for targeting by a variety of marketers,” says Deborah Gonderil, senior vice president for Synovate Diversity. Gonderil says that Synovate’s research with gay and lesbian focus groups shows that they “would like to have marketing targeted to them in gay media. But

they would also like to see themselves represented in general market advertising, as part of the American landscape.” As a group that has historically been alternatively ignored and persecuted, GLBT men and women feel particularly appreciated and welcomed as customers –and that in itself is reason enough for communicating directly to them, says Buford. His agency has been doing gay and lesbian focus groups for more than 15 years. Recently, Buford read an article stating that the gay and lesbian audience doesn’t want to be singled out. His reaction? “They’re so uninformed! On the East Coast, West Coast, Texas, Chicago and everywhere in between, gay and lesbian consumers appreciate and expect to be spoken to.” For companies that aren’t ready to tailor a campaign for this demographic, sponsoring an event is a start. In the summer of 2004, Pepsi-Cola became the first soft drink company to sponsor New York City’s Pride Parade, which is the country’s largest, with about 1.5 million visitors. Because most companies don’t extend this support, says Buford, such action “tends to stand out. Word gets out in the community and people respond. This market is very savvy. They know who’s on their side and who hasn’t been.” Gay-friendly companies that don’t have as strong a presence in the community as, say, IBM, American Express and Orbitz, can still effectively engage gay consumers. In 2004, Volvo produced an award-winning campaign that depicts an inclusive range of families with the headline, “Whether

Photo-illustrations by Emilio Rivera III

MARCH 2005 CHANGE I AGENT 11

COVER STORY

THIS MARKET IS VERY SAVVY. THEY KNOW WHO’S ON THEIR SIDE AND WHO HASN’T BEEN

12 CHANGE I AGENT MARCH 2005

you’re starting a family or creating one as you go”. The spread, which ran in the gay press, shows photos of same-sex couples, and promises to make donations to Human Rights Campaign, the gay-rights lobbying group. The premise of the campaign is that if you’re starting a family, Volvo is a great car for you. In 2000, the US Census collected same-sex household data for the first time. About a third of female couples have kids, and just more than one in five male couples do. By building on press about an increasing number of gay couples adopting children or having biological kids of their own, the family theme is very timely and appropriate for the target audience. A NOTE OF CAUTION Ads with diverse representations designed for the gay press remain the exception rather than the rule. Michael Wilke, executive director of the nonprofit Commercial Closet Association (www.commercialcloset.org), criticises the prevalence of heterocentric ads in gay media. By not going to the trouble of creating ads geared specifically for gays and lesbians, advertisers “risk not connecting with the audience”. In years gone by, gay window dressing was more common – messages were embedded and tended to go by straight audiences while “winking” at gay consumers. Buford says that this practice is “looked at now by the target audience as being homophobic, or as if they’re afraid to say, ‘we want your business’”. As confidence and budgets grow, an increasing number of brands, such as Bud Light and Bridgestone, are joining the likes of IBM, American Express and Orbitz to create gay-specific ads. TRAVEL TALES Since only about 20 percent of the GLBT community have kids – no tuition savings, nor early school nights – it’s not surprising

BLUSHING BRIDES
A year and a half before Massachusetts legalised same-sex marriage, Christopher Willis, registry manager at Bloomingdale’s in Chestnut Hill, conceived “The Pink Event”. In preparing a wedding show for the gay and lesbian community, Willis contacted vendors he’d worked with previously whom he knew to be gay-friendly, and advertised only in local GLBT press. Willis’s follow-up, “The One Event”, will target both GLBT and straight couples. He notes that this approach is “a little edgy” and that stores around the country are waiting to see what happens. One snarl Willis has encountered is embedded in Federated Stores’ computer programme: one partner must register as “bride” and the other as “groom”. Gump’s, a high-end but much smaller company in San Francisco, has already updated its language (“wedding registry” has replaced “bridal registry”) and notified local customers via direct mail. Prior to the ban in 11 states of samesex marriage in November 2004, Forbes estimated that same-sex couples would spend US$16.8 billion on weddings annually if states nationwide followed Massachusetts’ lead. Meanwhile, commitment ceremonies are on the rise and often use the same providers. With such a personal and expensive event, customer comfort levels are more important than ever. “They tend to be higher end, trendier, often a little older, so they have a lot of stuff already,” says Willis of his gay and lesbian clients. “Very often, they’re going for the very best.” ▲

that they take more vacations than their straight counterparts. Community Marketing, Inc, reports that gays and lesbians are 50 percent more likely to have travelled in the past year. Airline carriers like American, Delta, and Icelandair advertise in national gay magazines such as The Advocate, while local travel agencies and tour operators target smaller markets via regional gay newspapers, gayfriendly guides like Pink Pages or direct mail. Targeted specials include packages for major Pride events held in cities around the world, which sometimes coincide with circuit parties, the high-end destination events that have eclipsed raves for many gay men (and to a much lesser extent, lesbians). Once at the festivals, consumers will see a few major sponsors and a wide variety of local companies that support the celebrations.

GAY AND GREY “One area that’s largely untapped at the moment is the intersection of the gay and grey markets,” says Verónica Jijón, Synovate’s Miami-based director of marketing. “For companies with a product or service geared toward older Americans – some 10,000 baby boomers hit the big five-oh every day – there is a gay audience waiting to be reached.” Buford predicts seeing dedicated campaigns in areas where gay identity is key, such as gay retirement communities or age 50+ cruises. Joe Studer is the owner of Coyote Moon, a new luxury spa in Arizona catering primarily to older lesbians and gay men. As he puts it, many gay travel options are about “chasing boys around for sex, booze, and craziness. I wasn’t much into it in my 20s, and not at all in my 40s.” The element gay travellers say they

MARCH 2005 CHANGE I AGENT 13

COVER STORY

FROM CARS TO VACATIONS, FIRMS ARE DISCOVERING HOW TO TAP INTO THIS HUGE BUYING MARKET

14 CHANGE I AGENT MARCH 2005

COMING OUT INTO THE MAINSTREAM

MAKE-OVER The cast of Queer Eye for the Straight Guy

CUMMING Allan’s new fragrance

HER OWN TUNE Ellen DeGeneres

AD VALUE Tammy Lynn Michaels and Melissa Etheridge

seek the most on holiday is intellectual stimulation, according to a study from Community Marketing, Inc. Coyote Moon took that research to heart, and developed a regular lecture evening series on topics such as cooking and stargazing. These classes were a hit with a recent group of lesbians celebrating their 60th birthdays. “They changed the perspective of our whole staff,” says Studer. “We thought that they would just want to hang around for spa services, but they were doing classes, Pilates, hiking, horseback riding, nonstop. They were very sophisticated, active and alive.” THE SMALL SCREEN There has been a veritable explosion of gay media available. Almost all GLBT-themed ads are in print and online, but new broadcasting opportunities are rapidly emerging to effectively and efficiently target the desired audience. Sirius OutQ, “America’s Gay Radio Station”, is a satellite station featuring music and talk programming of GLBT interest 24/7. Here! is a channel that’s already available via satellite and cable in select markets, with some original shows and films as part of a scheduling programme geared

toward gay and lesbian viewers. And MTV has announced its intent to launch Logo, America’s first gay TV station, on February 17, to reach the “diverse GLBT audience and the friends and family who love them”. Italy’s Gay-TV attracts an audience that is 50 percent heterosexual, and it’s expected that Logo’s will be similar. Audiences can’t seem to get enough entertainment with gay themes. Will & Grace and Queer Eye for the Straight Guy feature gay characters and have wide crossover appeal to viewers of all sexual orientations. CBS’s Survivor, the top-rated reality show, had two out lesbians in its latest season and The Sims 2, the latest incarnation of the phenomenally popular video game, now allows gay characters to get married. Another recent trend is the hiring of openly gay spokespeople. Thom Filicia and Carson Kressley from Queer Eye represent Pier One and Marshall Field’s, respectively. Singer Melissa Etheridge and her partner Tammy Lynn Michaels appeared in a Cartier ad last December. And gay actor Allan Cumming is launching a unisex fragrance in 2005 called “Cumming”.

Ellen Degeneres, whose coming out on her sitcom Ellen made headlines a few years back, is currently appearing in a very funny television commercial where she dances to every bit of music she hears throughout the day, from Aretha Franklin’s Respect in an elevator to an ice cream truck’s ditty. No apparent product is being pushed and only her voice-over at the end reveals – “My life is about dancing to my own tune. My American Express card always backs me up.” OPPORTUNITY FOR THE TAKING As the Will & Grace generation continues to drive American society in the direction of more tolerance and acceptance of diversity, the gay community is experiencing dramatic change. The aging gay baby boomers will result in a much higher percentage of seniors than previously seen in the gay population. Continued shifts within this market will require flexibility and creativity on the part of marketers seeking to capture a market valued in the hundreds of billions of dollars. From cars to vacations, firms are discovering how to tap into this huge buying market, including moving beyond stereotypes. ▲

MARCH 2005 CHANGE I AGENT 15

LUXURY MARKET

ARE YOU EXPERIENCED?
PUSHING THE BOUNDARIES OF LUXURY
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LUXURY IS NO LONGER ABOUT RAMPANT MATERIALISM OR HAVING AND GETTING, BUT THE ENJOYMENT AND REVELLING IN THE LUXURY EXPERIENCE

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BY NICOLA DOYLE
YOU MUST REMEMBER THIS All that matters now is how the brand delivers this feeling or experience promised to the consumer, which is why five-star hotel chains such as Mandarin Oriental are providing increasingly personalised services to guests. There was a time when a Thomas Pink shirt was the perfect gift for a discerning businessman or woman. Now, guests staying at Mandarin Oriental in New York can enjoy the experience of having the finest English tailored shirts, pressed, boxed and hand delivered at the touch of a button. Guests staying in London at the Mandarin Oriental, Hyde Park, can even get a private room visit from Thomas Pink’s tailor. Starwood’s luxury hotel division, which includes the St Regis in New York, targets affluent travellers with an income of $250,000 or more and aims to take ordinary, everyday luxury to new heights. “We focus on how our clients experience luxury in our hotels,” says Douglas McKenzie, vice president of sales and marketing. “It goes way beyond satisfaction to a personal experience.” With rooms ranging from $800 to over $1,000 per night, the brand attracts royalty, celebrities, politicians and those who place a premium on privacy and personalised service. “Our concierge service has increased enormously over the last few years,” says McKenzie. “When you are spending that kind of money for a hotel room, you want more and more done for you. We are building experiences

hat do you buy the person who has everything? You know the type. They already own the Cartier watch, the Tiffany necklace and the Armani suit. Chances are their silverware is from Christofle, their home theatre system by Bang & Olufsen and they drive a Mercedes. It’s not an easy task, which is why websites such as redletterdays.co.uk have done so well. Red Letter Days sell once-in-a-lifetime experiences – the chance to drive a Formula 1 car, fly in a fighter jet or make your own movie. It’s the perfect gift for the person who already has it all, and among the affluent population of countries like the United States, such experiences are becoming the new luxury of choice. Luxury consumers in the US (the top 25 percent of households with incomes of US$75,000 and above) spend in excess of $300 billion on luxury goods every year, but the population’s culture of conspicuous consumption has left the consumer with a surfeit of material goods that, in turn, has left them yearning for something extra. “Despite the fact that luxury consumers buy prodigious amounts of luxury goods every year, they gain the greatest satisfaction and happiness from the luxury experiences they participate in,” says Pam Danziger, president of consulting firm Unity Marketing, which specialises in consumer insights for luxury marketers. “Luxury is no longer about rampant materialism or having and getting, but the enjoyment and revelling in the luxury experience.”

Photo-illustrations by Emilio Rivera III

MARCH 2005 CHANGE I AGENT 17

LUXURY MARKET

that people go back and talk about. We are building memories for people and that is a luxury.” Also in the business of creating memories is Crystal Cruises, whose successful formula sees it ranked as the sixth-highest hotel service in the world and voted number one cruise line for “World’s Best Service” 2004 in Travel + Leisure magazine. “We benchmark our competition not just against other cruise lines, but other leisure experiences you might have had,” says Gregg Michel, president Crystal Cruises, on the secret of their success. The brand keeps the number of berths down so that each guest can experience a sense of spaciousness often missing on other cruise liners. This also means

a higher ratio of service staff to guests and more room onboard for leisure services, such as dining, spas and Crystal Cruises’ Creative Learning Institute. The institute, which offers self-development classes from strategic partners, is all about the unique experience today’s consumer demands. “We have taken our enrichment programme one step higher with partners like Yamaha for keyboard lessons, Berlitz for language and the Society of Wine Educators to teach our wine series,” says Michel. “This even sets us apart from land-based properties. We provide a real learning experience.” THE LAP OF LUXURY According to research carried out by

Unity Marketing, a total of 72 percent of luxury consumers participated in one or more experiential luxuries (such as fine dining, travel, spas and maid services) in 2003, spending $9,020, compared to the 62 percent of luxury consumers who spent on experiential luxury in 2002 at a cost of just $7,000. While the service industry is already implementing changes to capture and maintain their market share of luxury experience seekers, the luxury product brands still have some way to go. “For luxury goods retailers, tapping into the new experiential luxury market means making an exponential switch in the way they market their products,” says Danziger. “Instead of highlighting quality and exclusivity, they must look at ways of

18 CHANGE I AGENT MARCH 2005

LUX AMERICANA
For more and more Americans with an excess of material goods, a fulfilling family life and rewards earned through career achievement, self-actualisation becomes the ultimate goal. Our culture as a whole is moving beyond the pursuit of material things, since those needs are largely satisfied. In the search for more meaning, people discover that experiences are the source of their greatest satisfaction. When they buy, the experiential values that rate highest among these consumers are enjoyment and pleasure, followed closely by a desire to enhance the quality of life. That encompasses enhanced creature comforts, from heated leather seats in your car to 400-threadcount cotton sheets and a cashmere sweater, as well as other personal dimensions that make life more meaningful and fulfilling. Health, family, friends, lifelong learning and spiritual comfort through one’s relationship with God all factor into an enhanced quality of life. Now don’t get me wrong, that wonderful pair of shocking pink Manolo Blahnik pumps I just bought surely enhances my quality of life by making me feel sexy, attractive, beautiful. But when you stack up living a luxury lifestyle surrounded by luxury goods against what really matters in one’s life, it inevitably comes up wanting. So luxury marketers’ challenge is to deliver quality of life experiences that give a new meaning or joy for the consumer’s life. Think about the innovative value proposition that Riedel Crystal presented when they introduced the revolutionary Sommeliers wine glasses. Who knew that the shape of a wine glass really enhanced the enjoyment for each specific type of wine, until Riedel showed us? The happy result for Riedel is that people had to buy whole collections of different and very expensive wine glasses to match all their wine choices, when before a single stem for white and another for red would do. The latest right-hand diamond ring advertising from the DeBeers’ subsidiary Diamond Trading Co that has been running with such regularity in the past year provides an example of advertising that talks directly to the experience. It’s effective because it links with the experience of the 21stcentury American woman who is its target: “Your left hand says ‘we’… Your right hand says ‘me’… Your left hand is your heart… Your right hand is your voice.” Polo Ralph Lauren, already one of the more experiential of all luxury retailers, is taking experience one better by opening a restaurant in their Chicago “miracle mile” store. And it’s not just a place to pop in for a snack, but a real fine dining experience that is rated one of the city’s best restaurants. Bulgari, Italian luxury jeweller extraordinaire, is testing the proposition that luxury consumers may want to not only wear Bulgari jewellery, smell like Bulgari perfume and carry a Bulgari handbag, but they also might want a 360-degree experience of the brand when they travel. So now Bulgari is in the hospitality business, as they open the first of a chain of luxury hotels and resorts in Milan. Luxury today has evolved towards a more personal, internal ideal of a personal lifeenhancing experience – call it luxury on the inside. And if marketers aren’t aligning their strategies and business plans accordingly, they may find themselves arriving late to the party. ▲
Pam Danziger’s most recent book is Let Them Eat Cake: Marketing Luxury to the Masses.

WHILE THE SERVICE INDUSTRY IS ALREADY IMPLEMENTING CHANGES, THE LUXURY PRODUCT BRANDS STILL HAVE SOME WAY TO GO

delivering a new shopping thrill, one that provides a memorable experience.” In the last few years, this can be seen in the proliferation of flagship stores opening in cities around the globe. Luxury brands frequently launch flagship stores in key locations, such as Louis Vuitton’s awardwinning Fifth Avenue store, where slick lighting and design combine to create a dramatic shopping experience. But is it enough to keep today’s consumer loyal? WHEN THE PRICE IS PRICELESS Samantha von Sperling runs Polished Social Image Consultants, which covers everything from personal shopping services to extreme makeovers and is best described as a sort of finishing school for adults (she will even teach you how to use a knife and

EXPERIENCE IS THE GREATEST SOURCE OF SATISFACTION

MARCH 2005 CHANGE I AGENT 19

LUXURY MARKET

TOTAL SHOPPING EXPERIENCE

Samantha von Sperling believes that luxury is in the living, not the buying

DOLLARS AND SCENTS Lorenzo Villoresi concocts

personalised perfumes for the rich and famous

IMMORTALISED Your loved one as the ultimate luxury experience

fork correctly). “I turn shopping into a total experience,” says Sperling. “I have everything ready, so when the client arrives at the store they have their own dressing area, all the outfits I have pre-chosen are laid out, there will be coffee, food and personal service so the client really feels special.” According to Sperling, what makes her business such a resounding success is this personal attention and service. “Luxury has gone beyond status. As the world gets smaller and the boundaries between work and home blur with wireless communication, anyone can buy anything, anytime over the internet,” says Sperling. “So the only reason people come to me is to experience great service. It’s that sensory luxury experience of feeling and interacting – the more extreme the luxury experience, the more people will seek it out rather than purchase online.” Celebrities have long had access to the extra experiences money and fame can buy. From private jet travel to personal assistants, every daily experience becomes extraordinary, and today’s luxury

consumers are demanding the same thing. Personal perfume maker to the stars, Lorenzo Villoresi, has turned the act of purchasing a luxury object into a luxury experience. People can travel from all over the world to visit his perfume studio in Florence, Italy. Inherited from his family’s ancient estates in Florence, the woodpanelled studio is lined with fascinating scents and ingredients collected from his years of travel and research, making the visit an experience in itself. LUXURY CAN BE FOREVER Whether or not the big brands will begin offering vacations to manufacturing plants where consumers can watch their custom designed handbag, shoes or car being made has yet to be seen, but if they want to stay in the game, they will need to look at how they are marketing their products. M&C Saatchi’s director of strategic planning in Los Angeles, Kate Bristow, describes some of the marketing difficulties faced by luxury brands today. “It isn’t as simple as it used to be 10 or 20 years ago when people had certain symbols

that they used to suggest luxury, like fur, diamonds, champagne. As time goes by those symbols of luxury become clichés. “Today, people are choosing experiences over objects. They say, ‘This is going to matter more to me than the object I would have previously bought.’” According to Danziger, at the root of this experiential need is ultimately the basic human desire for personal transformation. “For the luxury consumer, many of whom have an excess of material goods, a supportive family and a career that gives status, self-actualisation is the ultimate goal,” says Danziger. “Transformations, therefore, represent the next evolutionary step in commerce.” Talking of evolution, perhaps the ultimate experiential luxury lies with a company called LifeGem Memorials. The brainchild of several undertakers in Chicago, LifeGem offers the dying the chance to be immortalised as a diamond. The company can take the mortal remains of any human or animal, reduce them to carbon in the crematorium oven and turn that carbon into a diamond. Luxury really doesn’t get more transformative than that. ▲

20 CHANGE I AGENT MARCH 2005

OPEN MIND

ASIAN STYLE NEW LUXURY
BY GRANT THATCHER

I

f each decade could be said to have a buzzword then this decade’s is clearly “luxury”. Grossly overused at almost every turn, the publicity, PR and marketing firms worldwide would have us believe that luxury stretches from biscuits to handcream, from socks to furniture and from Malmesbury to the Maldives. With the advent of Chavs in the UK, highjacking designer labels and partnering them with cheap jewellery and low-end cars, the line is further blurred. The Asian market is utterly obsessed with what are commonly considered luxury brands – take a walk down Ometasando Dori in Tokyo or through just about any mall in Hong Kong. But walking into a high street luxury brand store doesn’t mean you have style, it means you have cash, two very different things. As the larger brands fight to keep the standard and pedigree of their product high, they cannot control the people who actually buy the product. Witness the recent Hong Kong newspaper coverage of mainland secretaries flocking to Hong Kong having saved hard-earned cash for months and then blowing US$4,000 on real

luxury goods: fakes are no-go, it’s either real or no-deal. With new Asian millionaires being created every minute, the larger brands find themselves on a precipice. The market is burgeoning, they want/need to sell product, but the people who buy it may not always be the best advertisement for their brand; witness poor Burberry’s fabulous phoenixlike rise from the ashes only to fall prey to the lager louts of England. So where are the new generation of stylistas looking in terms of retail and travel? The answer is simple: service. The epitome of luxury is, always was and always will be bespoke, where you have something unique, something to cherish (rather than last season’s embarrassment) and something personalised. If you run with the “label stable”, you can spend around US$2,000 and walk into the street with a ready-to-go luxury brand suit. Personally, I’d rather spend a little more time and a lot less cash (fabric couriered from Holland & Sherry in London, silk lining woven to order by Almeta in Bangkok) and have my Hong

LESS IS MORE, AND MORE IS BETTER

Kong tailor create a suit that is only for me; I want my shoes hand-coloured from Berluti; I want my shirts hand-made with 9cm French cuffs and fitted back darts; I want cufflinks created to my own design that I’ll never see on anyone else, anywhere; I want my luggage handcrafted to my measurements at Swaine Adeney Brigg and I never want to see a single logo, ever. It’s enough that I wear or use a product, I have zero interest in being a walking advertisement. Less is more and more is better. The new luxury is individualistic, detailed, discreet and all about service. Personalised service – service not just with a smile but with an “absolutely nothing is too much trouble, I will fly to the ends of the earth to fulfil your every whim”. And this is where the small, family-owned luxury brands score. Big isn’t always best. Take scent. There are any number of high-end, high-octane “big name” fragrances launched every year, but why smell like everyone else when you could be wearing a rare 200year-old Cistercian monastery recipe from the remote hills of Italy or your very own signature custom fragrance from Creative Perfumers in London. In travel, just as in fashion and food, it’s all about service and the uniqueness of experience: tour guides that go the extra mile taking you off the tourist track; boutique hotels that pull out all the stops with delicious products; the fluffiest towels and omelettes; the highest thread counts and the dreamiest bed. It’s about personal shopping assistants. It’s about ballooning in Sri Lanka at dawn, arriving at Spa Chakra in Sydney by Italian water limousine and eating lobster on a private jetty in Bali with your very own butler. Why run with the crowd? In fact why run at all, when you can walk firmly in the other direction. ▲
Grant Thatcher is the founder of Luxe City Guides, the pocket-sized luxury insider’s guide to the best dining, shopping and lifestyle Asian cities have to offer. He last bought a suit off-the-rack in 1988.

ME, MYSELF AND I The new luxury is individualistic
MARCH 2005 CHANGE I AGENT 21

MUSIC INDUSTRY

SOUND
THE LOWDOWN ON DOWNLOAD
BY MICHAEL CLEMENTS WE’VE HEARD IT SPUN OVER AND OVER – MUSIC LABELS LINING UP TO CONDEMN ONLINE FILE SHARING. AFTER ALL, IF VIDEO KILLED THE RADIO STAR, JUST THINK WHAT THE INTERNET IS CAPABLE OF. BUT BEHIND CLOSED DOORS, THESE SAME COMPANIES ARE PLAYING A DIFFERENT TUNE, MINING PEER-TO-PEER NETWORKS FOR VALUABLE DEMOGRAPHIC INSIGHT.

VISION
looked at airplay by market, by state and by format to measure how often it was pushed. Then, by looking at retail sales receipts, they could get a relatively good idea of the pull, the amount of money a particular album has brought in. By measuring the return of the pull against the investment of the push, labels deduced the effectiveness of their marketing campaigns, sales efforts and general popularity of their musical properties,” says Knab. Then came the internet – another substantial push (and pull) medium – and no longer could a direct correlation be drawn between airplay and sales receipts. The download revolution further caused fundamental change in how music is packaged. For example, Universal Music Group recently announced that it will

W

hen U2 released its latest single online – exclusively for a period of time – it set off another tremor in the tectonic shift that’s shaking the music industry. Faster than you can say 8-track, the focus of the music business moved from airplay and CD sales to data mining, targeted marketing and unbundling – the commoditisation of individual song titles. “The internet has caused the demise of the traditional marketing measurement of the music industry,” explains Chris Knab, a Seattle-based music business consultant and the author of Music is Your Business. “Traditionally, the recording industry

22 CHANGE I AGENT MARCH 2005

their favourite song, the label, the retailer and the band lose out. Or do they?
DIRE STRAIGHTS?

now offer contracts for new and upcoming artists based solely on one song. The move will allow Universal to track songs online and determine, based on quantifiable data, whether or not they should pursue a longer-term deal. If so, the label can gather enough consumer profiles to mount a targeted and smart sales and marketing campaign. Still, industry-wide change has been anything but an overnight sensation. “The fact is, the recording industry has

never really been in the sales to the enduser business. There has always been a retailer in the middle to handle that function. It’s going to take time for labels to adjust,” says Eric Garland, CEO and co-founder of the Beverly Hills-based online music tracking firm, BigChampagne. Notwithstanding, change in the music industry has caused alarm in accounting departments worldwide. After all, conventional wisdom states that when a consumer opts to pay US$0.99 instead of $15 to get

Life hasn’t been a song for the music industry these past few years. According to the National Bureau of Economic Research, the US music industry has lost one-fifth of a sale for each album downloaded from the internet. However, other research quoted by the IFPI global music industry body estimates some 15 percent of users who download music illegally go on to spend more on music. And therein lies the promise of online: get a teen interested in a band or song, and the amount they spend on downloads, ring tones and screen savers could add up to the profit of one sold CD. Add in the value of word-of-mouth advertising, and online file sharing begins to seem less and less adversarial. Nonetheless, the reality is CDs and other physical formats still drive much of the industry today – but they are losing market share to à la carte music downloads and music subscription services. According to Jupiter Research, total music sales will remain flat over the next five years, yet the online portion of the market will grow to $3.3 billion by 2008. They further project that by 2008, one out of every two dollars spent online will be spent on music. And, more and more, it’s teens who are spending that money.
SMELLS LIKE TEEN SPIRIT

Illustrations by Emilio Rivera III

THE INTERNET HAS CAUSED THE DEMISE OF THE TRADITIONAL MARKETING MEASUREMENT OF THE MUSIC INDUSTRY

Thanks to the internet, record labels now have direct access to a lucrative and influential group of teen consumers – particularly teen girls. According to Consumer Survey Report: Teen Music, 2003, teen girls spend 15 per cent more on music than boys and – aside from downloading and burning CDs – they are bigger digital music users in general and greater influencers on friends’ purchases. The fact that teen girls appear to be more impressionable in terms of their mu-

MARCH 2005 CHANGE I AGENT 23

MUSIC INDUSTRY

BY 2008, ONE OUT OF EVERY TWO DOLLARS SPENT ONLINE WILL BE SPENT ON MUSIC
sic purchase decisions than boys – and that they are more likely to share songs along with other types of information – should not be overlooked. Reaching these teen influencers is crucial for any brand, as they have the ability to impact the spending of their peers. Plus, influencers are likely to spend more on music and be exposed to multiple promotional channels. As such, labels should be able to target teen influencers with creative marketing. Tactics such as offering free trials of online music subscription services or gift cards preloaded for downloads should be able to create ample opportunities to offer crosspromotions and merchandising. Music executives seem eager to see more of the latter. In September, the industry held its first-ever conference in which major labels showcased upcoming albums for representatives from corporations such as Procter & Gamble, Pepsi and MercedesBenz. The message? Target your brands with our bands. Speaking at the conference, Phil Quartararo, executive vice president of EMI Music North America said: “Kids hear music on the radio, phone, iPod, in video games and on the internet, so we have to go to where the consumers are.” How are they doing that? As the music industry as a whole litigates, many of the individual labels are quietly reaching out to peer-to-peer (P2P) network tracking firms to find out just who their consumers are.

IN THROUGH THE OUTDOOR

Since the rise and fall of Napster, P2P file sharing has moved into the mainstream. At present, tens of millions of consumers are sharing their tastes in music, film and games online. The result has been the creation of one of the world’s biggest focus groups – and tracking firms such as BigChampagne are organising the data and offering them to labels for a fee. By matching partial IP addresses to zip codes, online tracking firms are able to create real-time maps of music downloading. BigChampagne sells subscriptions to its database that let a user track one album for $7,500, and bigger labels have annual deals for up to $40,000 per month. Its clients include the likes of Maverick, Atlantic, Warner Bros., Interscope, DreamWorks, Elektra and Disney’s Hollywood label. “I rely on this info almost religiously,” says Ken Bunt, senior vice president of

24 CHANGE I AGENT MARCH 2005

MUSICIANS CHIME IN
A study by Pew Internet suggests musicians do not agree with the tactics adopted by the music industry against file sharing. The company conducted an online survey of 2,755 musicians, songwriters and music publishers via musician membership organisations between March and April 2004. The survey found that musicians were overwhelmingly positive about the internet, rather than seeing it as just a threat to their livelihood. The study found that:

87% advertise and post music online 83% offer free samples 77% have a website 69% sell songs online

marketing for Hollywood Records. “Before a campaign, it is very helpful knowing ahead of time who our audience is going to be. In the middle of a campaign, we’ll find out who has joined in and we can decide how to better serve them,” he says. But that’s not the only use for the data. “A band might have a hot single being swapped and downloaded regularly, but their other songs aren’t being swapped at all,” explains Garland. “A record label would look at this and perhaps determine not to pay to send the band on tour, surmising a lack of deep interest in the band itself.”

Labels also use the market research to convince radio stations to increase a song’s spin. Or they can match a song’s demographic with a well-known TV show or video game. Programmes such as The O.C. and One Tree Hill put music from new bands in every episode. “This market research niche is still relatively theoretical in the music biz. But with change a must, it’s only a matter of time before labels begin to harness the demographic power of the internet,” says Garland. Bunt agrees. “It’s amazing, there’s all this information at our fingertips and 90

MILLIONS OF CONSUMERS ARE SHARING THEIR TASTES IN MUSIC, FILM AND GAMES ONLINE. THE RESULT HAS BEEN THE CREATION OF THE WORLD’S BIGGEST FOCUS GROUPS

percent of record labels don’t know who their audience is.” But as industry-sanctioned music services like Apple’s iTunes gain more of a foothold online, will the trend in research move away from P2P monitoring to legitimate download sites? For instance, in July, Billboard launched a new chart that monitors sales of downloads from legitimate services only. Bunt believes that’s still a distant scenario, saying, “I don’t think anyone expects pay-for-download sites to surpass illegal file sharing and downloading anytime soon.” Profit-wise, this doesn’t bode well for the music industry. Research-wise, however, the opposite is true. “P2P networks are a much better resource for music labels. Services like iTunes only provide demand information, not demographics. We want to know where these people live, how old they are, what other songs or artists do they like,” explains Bunt. Nonetheless, most major record labels remain silent about their dalliance with P2P networks – and for good reason. The record industry’s lawsuits against file-sharing companies hinge on their claim that the programmes have no use other than to help infringe copyrights. If the labels acknowledge a legitimate use for P2P programmes, it could undercut their case. But you certainly can’t blame the music industry for wanting to know more about its consumers. Bunt says: “It’s really a basic question – we want to know who our audience is.” The problem is, as music consultant Knab explains, “the trend towards iPod music has come so quickly that many kids aged 9 to 13 don’t even use band or song names anymore. They merely tell their buddies: ‘hey check out song 13’. How can labels track that?” The challenge for the major players is to be flexible, take risks – to be in tune with what their consumers want, as well as what they may be jiving to next. ▲

MARCH 2005 CHANGE I AGENT 25

FIGURATIVELY SPEAKING

MEET THE
“WOULD YOU, LIKE, STAY OUT OF MY LIFE, PLEASE!

F

ifty percent of 20-24 year olds in England live with their parent(s). Even more astonishingly, they are joined by two percent of 25-29 year olds. We can see the same phenomenon across the Atlantic, with 41 percent of 20-24 year olds in Canada enjoying the comforts of the family home. The official story is that it’s too expensive for kids to move out – but research across the UK, US and Canada reveals that there’s a bit more to it than that. In a nutshell, with rent and bills taken care of, their washing done, their bedrooms doubling as entertainment centres and their parents as best friends, why on earth would they want to? To understand how this transatlantic trend has come about, we must first understand the key cultural shifts that have influenced the contemporary parent. GROW UP We live in a society that is literally obsessed with youth culture. Being a grown-up has never been less culturally desirable, and adulthood has lost its connotations of wisdom and knowledge. Unsurprisingly, this has created an unprecedented identity crisis in today’s adults, triggering a desperation to stay young that is blurring the traditional parent/child boundary. Added to this, adult friendships now lack the strength and intimacy of past relationships and, in response, adults are

investing more and more in the one thing in their lives that is permanent: their kids. Since parents are having fewer children on which to lavish their attention, while also enjoying higher salaries thanks to dual incomes, the little emperor syndrome (kids ruling the roost) is rife. Contemporary adults’ parenting style is very much a product of their own parents’ approach – or, more accurately, a reaction against it. In the 1950s and 60s, youth was a young thing, synonymous with sub-cultural, antiestablishment attitudes. Young people felt different from their parents, at odds and misunderstood. In response, today’s parents have tried hard to create a very different environment for their children: one of open dialogue and negotiation rather than conflict and resistance. The following comment from a mother in the UK says it all: “When she was 15 my daughter asked me if she could take acid – well, I didn’t really know what it was so I said okay, but as long as you do it in the house. I checked up on her and her mates every 30 minutes – it was so funny!” As this attitude shows, parents are increasingly seeking to become a best friend to their children. And it’s working. Parents are becoming the most influential figures in children’s lives, informing their opinions and offering valued advice. For example, 43 percent of parents in the US admitted that they want to be their child’s best friend.

PUSHOVER PARENTS But things can be taken too far. As Ian Pierpoint, senior vice president of Synovate’s youth practice in the Americas, comments: “One mother wouldn’t make her child do homework because it would make him unhappy. This is the extreme side of best-friend parenting. The majority of best-friend parents are not setting guidelines and rules.” Following on from this, many homes have seen a power shift, with parents undertaking all the household duties and kids only pitching in when they feel like it. Notable, particularly in Canada, was a desire in some parents to regain control of the household and their children, but realising that they just wouldn’t be taken seriously (“where did I go wrong?”). Interestingly, only 28 percent of the teens and young adults interviewed in Canada say they intend to be a best friend to their children. Particularly when researching the North American market, ethnic and religious factors were closely considered. Families with strong cultural roots (Chinese, Punjabi, etc) tend to create a different home environment from Caucasian families. The culture dictates the child’s behaviour, not the parents. As such, respondents spoke of respect for their parents and their heritage, of unquestioning obedience, core family

26 CHANGE I AGENT MARCH 2005

PARENTS
values and a close connection with their grandparents. The research also identified the common issues surrounding single parenting but, surprisingly, also revealed that single parents often provide the more structured and respectful home – possibly because they have to say no. At the same time, however, they often become more emotionally dependent on their children. FEAR FACTOR Parents have always worried about their children, it goes with the territory. But today’s parents are worrying more about their child’s adult concerns, their careers, their relationships and their finances. Because of the mutually supportive relationships they have established, they hear everything a friend would, but since they are more emotionally affected by it, they also try to solve these problems. For example, a dad from the UK says, “My son got a paper route, but sometimes he couldn’t be bothered to do it, so I do it for him so he doesn’t lose the round.” Even stranger, danger is also a big worry for parents of younger kids, and it results in confinement within the family home. Parents purchase items to keep the kids happy in this space, creating a luxurious environment. The upshot? The kids don’t want to leave. But that’s okay, because

BUT WILL YOU STILL DRIVE ME TO THE MALL AND MAKE DINNER?”

parents don’t want them to leave either. Now, dads are the new best mates/taxi drivers/entertainers, with mums more likely to enforce the rules, push for success and govern the purse strings. ADULT-ESCENTS Of course, while we can make broad generalisations about today’s parents, the research also identified four different parent typologies with different attitudes to spending. In the US and Canada, adults will spend US$100 billion this year on consumer products for their teens. So what’s the impact of all this on contemporary youth? Broadly speaking, we have a generation that is less mature than their parents’ generation and have little grasp of adult life. Much of today’s young adulthood simply don’t know what it is to be an adult. Many are reluctant to lose their youth lifestyle, and as a result are not becoming parents until later in life – an inclination that is strengthened by celebrity influences and medical possibilities. Where moving out and slumming it was once a rite of passage and a badge of honour, without pressure from society to grow up, the ease and comparative luxury of the family home usually wins out. Pierpoint sums up today’s adults in a nutshell: “We call them ‘adult-escents’. They are 25 years old but have the life skills of a teenager.”

IMPLICATIONS FOR MARKETING Brands are obsessed with identifying and influencing opinion formers – but what they often fail to realise is that the real opinion formers are mum and dad. Parents may well be helping to fund the purchases that are being marketed so strenuously to young people and, as a result, they will be interested, involved and influential. For example, decisions about high-end purchases such as cars will probably be taken at a family level – for consumables, kids will mostly just eat what’s in the cupboard. As such, parents need to be considered in both research and communication. And we must not assume that pester power is driving sales – it could well be “guess-ter power”. Parents often pre-empt their children’s wishes and need to know as much about the latest youth products as their kids. In fact, 73 percent of people in Canada said that the last purchase they made for their kids was something they guessed they would like. Parents don’t want to waste money and they don’t want their gifts to be rejected – as such, they crave the guidance and safety net of trustworthy brands. ▲
For a closer look at what makes the next generation tick, contact Mischa Gilbert ([email protected]) or Jo Butcher ([email protected]).

“MAY I TAKE SOME ACID?”
MARCH 2005 CHANGE I AGENT 27

HEALTHCARE

IS THERE A TECHIE IN THE

ELECTRONIC MEDICAL RECORDS SYSTEMS – WHAT THIS MEANS FOR THE PHYSICIAN, THE PATIENT AND THE MARKETING

I

n a recent Wall Street Journal article, a patient reported being able to email while having a dental procedure, thanks to her dentist who installed a computer to the arm of the chair. In another healthcare provider’s office, patients submit their medical history using the practice’s website or a PC in the waiting room. Doctors use tablet PCs to record symptoms and diagnoses, write out prescriptions and check insurance codes. Billing is automatic and patients are able to pick up their typed prescriptions at the front desk. Even biopsy reports can be converted into emails that are sent to the treating physician. It appears the technology that many of us have been using in the corporate world or in our personal lives is now beginning to be adopted in physicians’ practices. Massachusetts became one of the first states to push electronic records keeping via a new initiative labelled eHealth. This will

enable doctors in Massachusetts to access patient records from any hospital or clinic in the state by computer. The Bush administration has appointed David Brailer as the National Health Information Technology Coordinator to oversee and implement the use of high technology to reduce healthcare costs for everyone and dramatically improve the quality of medical services. Many providers of electronic medical records and lobbyists have rushed to approve such a plan, stating that it would profoundly improve the health of the American people. Seamless and interoperable transmission of health data can increase efficiency, improve quality of care, reduce medical errors and bring down administrative costs. Proponents of such systems point to the big savings in administration costs. According to one report, over half a trillion US dollars are spent every year in administration expenses. Some practices have been

able to trim their office staff and payrolls considerably, using part-timers and seeing patients more than manila folders. There are many obstacles, however, to implementing such a plan which deals primarily with patient privacy and the protection of patient information. Other obstacles include the cost of the systems to physician practices, and the need for all data to be housed in electronic format for this system to be completely effective. So how do these paperless records systems affect physicians, patients, insurers, market researchers and audit services? AN ONCOLOGY CASE Currently, fewer than three percent of oncology practices are using a practice management system, although these systems appear to be the future of records keeping. These records systems can be customised to individual needs. Some practices are adopting these programmes

28 CHANGE I AGENT MARCH 2005

G RESEARCH INDUSTRY BY JACKIE ILACQUA AND NICK RAMAN
for only handling the office billing and insurance claims, while others are moving as close as possible to being paperless, recording all relevant information such as diagnoses, blood tests, prescriptions and family history. A paperless oncology practice may have far fewer medical errors resulting from misunderstood handwritten notes and charts. Instead of recording information in patient folders, physicians come into examination rooms armed with laptop computers or wireless PC tablets. This technology enables them to pull in patients’ medical histories and treatments efficiently, and make revisions or write out new instructions. Chemo rooms are set up with computers for drug administration and ordering, thus minimising any oversight of patient sideeffects and allergies. In today’s world, medical groups are expected to run highly competitive businesses while simultaneously providing compassionate clinical care. As such, physicians are challenged to find the electronic medical system that works best in their practice and helps them meet their specific objectives. As electronic medical records technology becomes more pervasive in the healthcare setting, there are still many questions left unanswered for physicians unable to take time away from their practices to gain greater insight. This has created an opportunity for new business development. The Medical Records Institute capitalised on this need and developed a new educational series, the “Electronic Medical Records (EMR) Road Show”, which brings the country’s leading experts and most prominent vendors to physicians and practice administrators. THE FUTURE Besides a massive reduction of paper, there will be a much tighter reign on the medical practice in general. In a recent article in the Medical Group Management Association, Dr Jeffrey Hurless, a podiatrist from California, explains his experience with electronic medical systems as follows: “The EMR system is paying off in customer satisfaction and marketing benefits. It is also improving care and reducing cost through the elimination of chart-pulls, increased billing accuracy, decreased supply spending, reduced storage requirements and decreased copying expenses.” WHAT ABOUT THE PATIENT? This enables patients being treated with respect and dignity in a well-organised practice where money is being invested to ensure that treatment is being managed appropriately. Taking this one step further, providing patients with access to their electronic medical records via the internet has the potential to profoundly influence the delivery of healthcare in the 21st century. Simply by changing the loci of ownership and control from one that is exclusive to physicians to one that is shared with patients, the balance of power and potential for patient empowerment increases significantly. Recently, Case Western Reserve University, in partnership with the MetroHealth Medical Center and the Cleveland Clinic Foundation, was awarded a US$1.5 million grant from the Agency for Healthcare Research and Quality to evaluate whether advanced technology for record keeping and patient empowerment can improve the care and health outcomes of patients with diabetes. The multi-arm research project will take advantage of the state-of-the-art EMR system used by both MetroHealth and The Cleveland Clinic to study the system as it is currently used, and to examine it with enhancements for physicians and patients. Randall D. Cebul, MD, professor of medicine and director of the Center for Health Care Research and Policy at Case and MetroHealth, is the principal investigator of the project. “We are conducting this study because strong evidence demonstrates that better processes of care lead to improved outcomes. The question is, what are the best means to use revolutionary new health technologies to improve decision-making and outcomes? That is what we hope to answer,” says Cebul. “The care of diabetes is very complex and a number of measures need to be monitored and measured to take better care of patients,” he adds. “The decision-support within the EMR will allow physicians to view all of the important measures in all of their diabetic patients and, with a click of a button, update and order referrals, tests and treatments that need to be done for their patients. It consolidates all of the measures in the good process-of-care parameters that the American Diabetes Association and others have demonstrated are important in the care of patients with diabetes.” ▲
Jackie Ilacqua is senior vice president and executive director of Global Tandem Oncology Monitor in Mahwah, New Jersey. Nick Raman, assistant vice president of business development for Synovate Healthcare, is based in Princeton, New Jersey.

HOUSE?

BESIDES A MASSIVE REDUCTION OF PAPER, THERE WILL BE A MUCH TIGHTER REIGN ON THE MEDICAL PRACTICE IN GENERAL

MARCH 2005 CHANGE I AGENT 29

RESEARCH RESOURCES

BODY OF TRUTH
AUTHOR: Dan Hill IN SUM: New research techniques to probe
consumers’ psyche

LEVERAGING WHAT CONSUMERS CAN’T OR WON’T SAY

REVIEW: Truth is elusive and so are consumers. The traditional rational approach to research won’t do because, well, consumers are irrational. No news there, perhaps. But this book shows marketers how to tap into that irrationality to make it work for them. The message here is you need to go deep, not wide, to find out and measure what makes buyers tick. This book is an elevator ride down into the consumers’ basement where their deepest desires and needs lurk. In this realm of the senses, Hill explores the rational approach to marketing and market research, turning to the new technology of biofeedback, sensory logic and facial coding to measure and record what consumers truly think about products and advertisements. AS AN AGENT OF CHANGE:

HOW TO FEED FRIENDS AND INFLUENCE PEOPLE
AUTHOR: Milton Parker & Allyn Freeman IN SUM:
Self-promoting, sure, but the authors are great kibitzers and there’s plenty to nosh on

MARKET RESEARCH IN THE INTERNET AGE

THE CARNEGIE DELI – A GIANT SANDWICH, A LITTLE DELI, A HUGE SUCCESS

LEVERAGING THE INTERNET FOR MARKET MEASUREMENT AND CONSUMER INSIGHT AUTHOR: Robert Monster & Raymond Pettit IN SUM: The high-tech forces reshaping market research
and business information worldwide

REVIEW: Market research knows all about change, and one of the key drivers has been new developments in communications. From telephones to mobile broadband, personal computers to the worldwide web, keeping up has presented a mixture of challenges and opportunities. The latest tech trends present clear advantages to MR firms, such as reducing the huge costs of mining data, faster and easier ways to correlate data, and the ability to react to data in real-time. With an in-depth grasp of traditional forms of research versus the latest tech-driven trends facing the industry, this timely book provides a wealth of information. Case studies, useful charts and graphics, perspectives from industry leaders, and an extensive glossary support the analysis of this new era in market research. AS AN AGENT OF CHANGE:
30 CHANGE I AGENT MARCH 2005

REVIEW: Built on values from the first day it opened in 1937, Carnegie Deli’s story goes beyond its absurdly huge sandwiches. It’s a family business that has succeeded in a highly competitive environment because it knows its customers, knows how to adapt to market forces, and how to promote its products in a highly competitive environment. The book is a delight to read, except the recipes for cheese blintzers, corned beef hash and chopped liver might have you running to the kitchen every few pages. But how can you fault such chutzpah, when thugs with sawed-off shotguns once robbed the deli and the owner had the last word: “The schmucks took the money and left the pastrami!” AS AN AGENT OF CHANGE:
BOOK RATING Read now Read soon Read later Wait for vacation Don’t bother