Blog | Mike O'Toole 10.25.17

Beware the Blindspots: Here’s how Brands like Prudential and Lagunitas Find and Fix Market Gaps

Great marketing is about finding the right intersection between a marketplace gap, say an unmet need the buyer has, and a brand's assets, something you do better than anyone else in your category. But finding gaps are a whole lot easier said than done. So at PJA we found some ways to break it down on the latest edition of our podcast examining these “Blind spots.”

These are the mismatches in a market between what the buyer wants or need, and what the category's providing. But the blind spots aren't obvious, because our marketing and buying brains have filled them in. We get used to the way things are, and that's why blind spots, and lots of market place gaps, represent a latent opportunity. You have to do the work to find the blind spot first.

Take a listen as we identify these problems and dive deep into how to address them… If you can find and fix those, you are in a much better place to uncover some new opportunities in your category.

PODCAST TRANSCRIPT

Biff:
I can't believe you loan me your car without telling me it had a blind spot.

McFly:
Blind spot.

Biff:
I could've been killed!

McFly:
Now, now, Biff, now I never noticed that the car had any blind spot before when I would drive it.

Biff:
What, are you blind, McFly? It's there. How else do you explain that wreck out there? Hello? Anybody home? Think, McFly.

Mike O'Toole:
Great marketing is about finding the right intersection between a marketplace gap, say an unmet need the buyer has, and a brand's assets, something you do better than anyone else in your category. But finding gaps are a whole lot easier said than done. So at PJA we found some ways to break it down. Taboos, blind spots, and rots. If you can find and fix those, you are in a much better place to uncover some new opportunities in your category.


I'm Mike O'Toole, I'm president of PJA Advertising. I'm here with Robert Davis who heads up strategy. Hey Robert.

Robert Davis:
Good to be here, Mike.

Mike O'Toole:
Today we're focused on blind spots. Now, we use that term blind spots all the time for lots of different applications. In fact, Biff talking about Marty McFly's car, the driving blind spot is probably the most common one, but we talk about cognitive blind spots, conversational blind spots. It's easy to actually forget the physical blind spot where the term springs from.


Robert, you're more of a science nerd than I am. But apparently where the optic nerve connects to the retina, there's an actual blind spot. There's a lack of light detecting receptor cells there. So we actually can't see there. But, the brain's actually fill in the blind spot. So, the blind spot is there, but we don't perceive it.


So it is with marketing blind spots. These are the mismatches in a market between what the buyer wants or need, and what the category's providing. But the blind spots aren't obvious, because our marketing and buying brains have filled them in. We get used to the way things are, and that's why blind spots, and lots of market place gaps, represent a latent opportunity. You have to do the work to find the blind spot first.


So, my favorite example of a really big honking blind spot is beer. And the way this works is, for most of the 20th century there were like seven beers to choose from in the United States. American breweries were selling german style lager in huge quantities to beer drinkers. And this is really a structural gap. The beer industry was structured based on what made sense to the industry, and to a mass market of consumers. That seemed to work pretty well.


But the thing is, most of us didn't know it, but we wanted more. There was a latent desire for more diverse, interesting, and local beers. Witness the beer industry today. There's five thousand breweries in the country, and they offer every kind of variety. Now, it was breweries like Lagunitas that were pioneers here. Tony McGee, who founded Lagunitas, was a guest on the unconventional, and he is actually the guy who coined the term Darwinian Gap. And the sense there, it's such a big yawning gap in a market that it takes a big evolution in a market to actually fix it. Even through the mid 70s and mid 80s, the minimum scale for a brewery was two million barrels.


Now, you have breweries like the Alchemist in Vermont, which brews Heady Top, or The World's Best Beer, that thrive brewing ten thousand barrels. And, there's lots of other good examples of structural blind spots. Take the food industry.


It's not longer one size or one burger fits all, right? There's tons of examples of local and organic food coming out of the shadows and into the mainstream. Lots of examples of what were considered dead or dying industries, like vinyl or analog watches, or even craft in general where, in the name of economy's of scale or innovation, an industry wanted to move in a certain way. But actually the buyer said, not so fast, right? We value what you want to leave behind, so we're gonna create smaller industries there.


So these are all structural blind spots. But not all blind spots are structural. Robert give us an example of a different kind of blind spot.

Robert Davis:
Sure, Mike. You often find blind spots when you've got a meaningful innovation to sell, that buyers just might not be ready for. We see this all the time in our work at the agency, right? With our life sciences and technology clients, where there's lots of innovation and you're constantly ahead of your buyer. Thinking about this from my own perspective, as an amateur photographer, I've experienced this when I was shopping for a new camera.


And, as a little bit of background, over the last five years there's been a ton of innovation in digital photography. One example is the emergence of these mirror-less cameras as an alternative to the big heavy DSLR, those big cameras that I think of as the Chevy suburban of photography, right? They're extremely capable but not everybody wants or needs to drive a truck, right? Or carry that big, heavy, professional grade camera. Some brands that just weren't doing all that well at the DSLR space embraced some emerging standards, so some innovation in the category, right? And it let them make these near professional quality cameras that were much lighter, and much smaller.


So, as I jumped into this market, what became clear was that I was gonna have to figure out what kind of camera I was gonna buy. And what was truly astonishing to me, was that neither the mirror-less nor the DSLR brands were doing anything to fill that gap, that information gap that exists in terms of knowing how to buy.


I think they've lived in this world, they've just gotten used to this idea, that it's a fixed category, so building our brand is the best way to influence the consumer's purchase. Is it gonna be Nikon or is it gonna be Cannon? But now, this entirely new category has emerged, and it seems that the brands are blind to the opportunity to help buyers figure out what type of camera is gonna be right for them. And, in the meantime, other people like bloggers and third parties step in and fill the void. But brands are totally missing out on the opportunity to be the voice that helps the consumer make the right decision for them.

Mike O'Toole:
Yeah, that seems like it's total blind spot, and we know from research across categories that buyers actually want the brands there. They are looking for the brand to help them make better decisions. They don't trust them exclusively, but they want that voice there.

Robert Davis:
Absolutely. A trusted voice that can be part of the mix.

Mike O'Toole:
That's a great example of a sort of buyer readiness gap. Like, the innovation has sort of outstripped the buyer's readiness to buy. It reminds me of another sort of readiness gap, which is in financial services. In particular, it's around retirement savings.  For a long time we have turned a blind eye to what we really need to retire. Which means, we don't do the small things today that can prepare us for 10 or 20 years down the road.


That's a cognitive blind spot for us as consumers and we see research that says too much choice or data actually paralyzes us. Which is actually where a lot of the brands invest in their marketing. They try to throw the charts at us which say, hey you should be having saved this much, you've only saved this much, you better get going. That actually doesn't really get us moving.


There is a brand, though, that's done a really great job of unpacking this particular blind spot, and that's Prudential. I know it's an example that we both admire, Robert, the challenge labs campaign is a great experiential way to get us to understand our own cognitive biases as they relate to retirement. One of the things they've done is these big experiential campaigns.


For instance, they built this huge wall in an Austin City park, put a big infographic up on it, and asked people to put blue stickers next to the age of the oldest person they know. And, after an afternoon in the park, you see tons of blue stickers clustered around ages like 99 or 100 or 102. And what I think that does is you are engaged in that, you realize, God I've got two grandparents who lived to 100, and my retirement, I haven't really thought beyond 80 or 85. There is a mismatch there.


I think brands that are willing to go a little deeper, and uncover what the roots of blind spot are, can be really successful in breaking through.

Robert Davis:
Yeah, Mike. One of my favorite examples in that Prudential campaign is the series of 4.01k road races, right? That they've put on in quite a number of cities around the country. And, in doing so, give you really the chance to experientially make choices. And an example of this is, as you're running along the course, that you're faced with sort of two gates to run through. One says yes and one says no, and over the top is a big question: could you devote 1% more of your income to saving for retirement?


So you're physically being forced to engage with the question that you're really not answering.

Mike O'Toole:
Yeah, it's great.

Robert Davis:
Yeah and it turns out that financial services, which is such an interesting combination of innovation and lots of tradition.

Mike O'Toole:
And complexity.

Robert Davis:
And complexity. It's rich with examples where that complexity you mentioned and data kind of come together maybe to create blind spots. For example, it's been conventional wisdom that you're lucky enough to start to get some money together, you get a financial advisor. But the truth is, when we look to human beings to guide our investments, whether that's a financial advisor that you hire or at a distance through a mutual fund manager, the majority of the time they don't beat the market.


A new report that just came out last month from SAP says that one in twenty actively managed mutual funds beats any equivalently focused indexed fund. Incredible, and yet most of us, more than 60%, continue to invest in traditionally managed mutual funds.


This is a blind spot that Jack Vogle of Vanguard saw and designed and introduced the Vanguard 500 index fund. First of its kind. These index funds have really become an industry standard. They cost a lot less to run, you get to keep more of your money while you're also equivalent or even better performance than the market most of the time.

Mike O'Toole:
Yeah, and I think that blind spot did open the way for a brand like Vanguard, and others that have since introduced index funds, or even, I would say, financial advisors who can be really valuable in helping motivate us and helping us wade through complexity of different financial instruments. But I would say, beware of financial advisors promising alpha, right? They can do better than the market.

Robert Davis:
Yeah, absolutely. And it's that notion of the promise of expertise that really can contribute to the formation of that kind of a blind spot, right? We are wired to look to experts to make sense of complicated information for us. That's great for them, we see them as important and that guarantees their career path.


This happens in investments, but there are other places that are a little less obvious where this happens as well. Like the kind of decisions that drive the enterprise productivity software market. For years workers have been served up giant monolithic applications from companies like SAP, and Oracle, and Microsoft. Where you've got a small team of experts deciding what the software is gonna do and the ways that you're going to be able to use it.


A few people make those decisions from the top down, but when innovation comes along, like software as a service and the cloud, all of a sudden the gates get opened up for lots of entrepreneurs to make productivity apps and put them directly into the hands of users. You could sign up for Slack in the time that it takes me to say this sentence. This week, just about six million people will use Slack. And four million of them are on the free version, which means they can go to the website, they can just sign up and start using it without any experts making any decisions for them about how they do their work. And that's the kind of blind spot that has to worry companies like SAP and Oracle, who are used to making those decisions for us, right?

Mike O'Toole:
Absolutely. Now hopefully you've gotten the sense that if you're in an innovation driven industry, blind spots are all around. But what can a marketer do to find and uncover those blind spots? And I would say the first thing is really look at your industry for those structural blind spots we've talked about. Complexity, or economies of scale that limit information or choice or competition or, in the case of Enterprise Software, leaders who have a vested interest in not asking the kinds of questions or making the kind of change that can bring advantages to buyers.


So it means that, actually challengers are much more likely to find and meet these blind spots. They're much more likely to drive change in the market that's good for buyers. If we're talking about Enterprise Software Sales Force was the first example of that, right? They were the first ones to take on SAP and Oracle, and really break that market open. Or Warby Parker and Eyeglasses, they took on Luxotica and actually figured out how to sell really affordable great glasses for a fraction of the price.

Robert Davis:
The other thing is to just look deeply at your buyer. Where are they making decisions by default? Or just applying assumptions that might be out of date. I love the Sales Force example; when they set out to market themselves, they didn't say, hey we've made a little bit better software, or even, we made radically better software.  They said, no more software. And that's a cue not just to the fact that they want to satisfy your needs, but that their suggesting there's a completely different way to buy in the category, in that they want to help you learn about that. And that's a case where innovation has changed the options that are available, the buyer needs help catching up, and the brand can really play a role in helping them do that.

Mike O'Toole:
So that's blind spots and if you need help finding the gaps in your market, come talk to us at AgencyPJA.com. I'm Mike O'Toole, PJA's president.

Robert Davis:
And I'm Robert Davis.

Mike O'Toole:
Talk to you next time.

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