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Number
68: September 8, 2004
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This week in Katydid:
When
in Doubt, Follow the Money
As marketers and advertisers, we're always talking about target audience
and the consumer; but for some industries, it's not clear exactly who
the target audience should be. There are complex layers you must
consider.
I can't imagine two industries more complex than health care and
education. The consumers of health care are patients. For education, the
consumers are students. However, these are not the sole beneficiaries.
For example, when doctors treat a patient who is highly infectious, any
person who might have encountered that patient receives a benefit. We
also benefit when a mentally ill person receives their proper treatment.
At an individual level, we probably don't have to care if the
neighbor's kid gets a proper education until he's trying to make change
for our decaf, non-fat, grande café mocha. We develop value messaging
every day expecting that our audience has the basic ability to analyze
and compare two measurements.
As capitalists, Americans like to use the free market to solve all
problems. A free market operating with minimal government regulation
tends to find equanimity between buyer and seller over the long term.
This works brilliantly in simple markets. It works so well, in fact,
that we like to oversimplify markets in order to make the laws of supply
and demand apply.
However, as soon as the benefits of a product or service apply to
society, then government gets involved to manage standards. The battle
then becomes over whether there is too much or too little government
regulation. But the real problem may be that we haven't analyzed the
market properly. We need to make it easier for the customer and the
provider to exchange goods and services.
Whenever I find myself sitting in a doctor's office having had to
wait an extra hour in the waiting room, I think to myself, "Well,
this is lousy customer service. I'm paying the bill; you'd think the
doctor would want to keep my business." Then as I'm writing a check
for my $15 co-pay, I realize, I'm not the customer at all. The insurance
company is.
Looking around the lobby, one realizes that the entire experience is
the result of putting the needs first of the companies paying the bill.
The problem becomes even more acute in hospitals where a significant
part of the triage is determining one's ability to provide an insurer.
As a patient, your treatment depends almost entirely on what the
insurance company is willing to pay. For example, most insurers allow
for chest x-rays upon entry to the hospital. There are sound medical
reasons for this. But many patients - especially the elderly and other
chronic patients - receive chest x-rays every time they are admitted to
a hospital. This happens even when they walk in with recent pictures
from another hospital.
In this case, the patient may be the consumer of the product, but
they are not part of the negotiation. They have become, essentially, a
warm lead to the doctor or hospital in order to bill for services. This
does not mean there's corruption in the industry, although I'm sure
there are some who exploit the system. It means the market will
naturally find equanimity between the buyer and the seller, and the
patient is only a minor player.
Charter
schools and voucher
systems attempt to apply free market principles to education.
However, they suffer a similar problem in that they may not provide a
superior product because the buyer is not the consumer.
Charter schools and vouchers provide greater leverage for the parents
because they make an immediate economic impact on the school when they
move their child. Public schools also feel an impact when a student is
moved, but it takes longer because the assessments come less frequently.
All schools receiving public funds feel economic pressure when fewer
taxes are assessed in their districts.
Even though the taxpayer pays the bill in either public or charter
schools, they are isolated from the process by the administrations that
cut the checks. In education, the bureaucracy is the customer, which
means the quality of your child's education is strongly influenced by
the clerk that processes the forms. Once again, essentially your child
is a warm lead for the school to bill their school district.
(Vouchers are worse in that they will also drive up the cost of
private education. They will do this by increasing the market's ability
to pay in the same way that lower interest rates have driven up the
average price of a home. Homebuilders know how much you can afford to
pay per month. With lower interest rates driving down the monthly
payment, builders increase the total cost of the house (or you add
additional features) to keep the payments the same as when rates were
higher.
When private schools know that their customers will have access to an
additional amount, they will increase their rates to take advantage.
Private school customers won't complain because they don't have to pay
any more than before. The result will be that private education will
cost a bit more, public education will serve those students who can't
afford to move anywhere else, and a new middle group of private schools
will emerge that cost about the same amount as the voucher. For proof,
one need only look to the tuitions of trade and technical schools, which
are nearly identical to the maximum amounts of guaranteed student
loans.)
Marketing to complex industries means taking into account the entire
matrix of consumers, payers, and beneficiaries. You can see it at work
in the pharmaceutical industry where patients are targeted directly for
drugs. The advertisers have to find a strategic high ground where they
can communicate to the patient without alienating physicians, and at the
same time comply with government regulations.
Oddly enough, the success of these campaigns proves that patients can
influence the process when they act collectively. The collective
behavior makes the financial impact significant for the industry.
The same would hold true for education. In order to influence the
market, the consumers need to behave as a group. It doesn't matter
whether you use liberal or conservative tactics to achieve these aims.
Improving the system can be done with either approach, so long as the
consumer has greater influence with the seller.
Marketing in these volatile and complex industries requires that you
take into account the conflicting needs of all audiences. Then you have
to stake out a messaging architecture that will positively influence all
groups. You should also consider how each audience would react if they
encountered messaging intended for another group. Having this kind of
matrix ensures that you deliver a consistent message to all your target
audiences.
Double-check Your Blind Spots
Chances are you work in an industry with complex messaging needs. One
of the many services I provide at KTD Communications is analyzing your
content to see if it's sending the right message to your primary and
auxiliary targets. For example, you'd be surprised at how often the
employment opportunities section of your web site undermines your main
messaging to your clients. Looking at your content streams in parallel
can be an eye opener. Contact me today and we can go over it together.
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Kind regards,
Kevin Troy Darling
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