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Podcast Transcript: Selling to the world's toughest customers

Young people around the world spend billions every year on everything from electronics and entertainment to clothing and footwear.

This key demographic has long been sought after by companies for obvious reasons. But marketing to youth is notoriously tough.

Stick around as my next guest helps us understand what it takes to do business with young people. I’m Michael Mancini, Editor-in-Chief of CanadExport, the official e-magazine of the Canadian Trade Commissioner Service. Visit Canadexport to subscribe. It takes seconds and it’s free.

Also, tell us what you think of our podcasts and how we can improve. If you have story ideas, or business questions you want answered by our worldwide network of trade commissioners, let me know. Just send an email to CanadExport. Now back to the show.

Michael Mancini: I'm speaking with Max Valiquette, president and CEO of Youthography, a research and marketing communications agency dedicated exclusively to youth. Thanks for speaking with me Max.

Max Valiquette: Thanks for having me.

Michael Mancini: So Max your company is known for the research it does on youth. What are the top things that make young people buy things?

Max Valiquette: Well it's pretty much the same thing that makes adults buy things frankly. I mean it's a combination of what is that brand about, what's the brand mean to them, what is the price of it, how much do they need it and how valuable does it actually seem to be to them. The thing that really distinguishes young people from adults is that there's actually a greater focus on value then there is for adults.

Michael Mancini: Interesting, now you would have thought that brand image would be a bigger factor for young people than it is for adults. You're saying it isn't?

Max Valiquette: Well what's interesting about it is this, is that brand image is often a part of how young people define value, meaning that that value component of the brand may end up meaning a little bit more to them then it might, then it might mean to a grown up. But truthfully I think anyway adults have these sort of long ingrained habits in terms of the brands that they connect to. So actually they have a much more, a much more established relationship with a brand then a lot of young people do.

I think a lot of people mistakenly think that young people are fickle when it comes to the brands that they turn to and it's not. I think it's actually more a question of having fewer long-standing ingrained habits. But you know we know that young people when we ask them versus adults, you know “what's important to you in making a purchase,” the value that they see to them really, really matters. They might define that value different than an adult does, but certainly that real value to them and their lives is important.

Michael Mancini: Why do you think that is?

Max Valiquette: Well I think it's, it's less disposable income frankly. And it's less of a sense of overall control over that level of disposable income. And it's interesting, I guess when we talk about brands I think there's a part of that brand equation that's more important to young people in that, in that brands that have a bit of a badge value to them can often matter more to young people. But badge value isn't the only thing that a brand does which is why if you've been washing with a particular laundry detergent for 45 years that's your brand. And above and beyond the commercials that are on TV or what you see in a magazine or the way it's displayed in, at whatever retail channel you're buying it, you have a 40 year relationship with that brand and that's why you go back and continue to buy it.

Young people don't have 40 year relationships with brands. So the overt branded marketing about it, and the badge value of it might be a little bit stronger, but the overall equity of the brand means more to adults just due to the amount of time they've had to work that brand into their lives.

Michael Mancini: What about product quality?

Max Valiquette: Well there's an element of disposability in products that I think young people are more susceptible to, meaning that because they've been around for less time and because everything is kind of impermanent I think for a young person, I think often there's, there's less of a sense of how long maybe a product should last for. Cell phones are a great example of this category where I think your typical adult is more willing to hang on to a cell phone for a couple of years, your typical young person if they could change their cell phone every single year, and there's less of a sense of maybe this thing is supposed to last, which I find, which I find really interesting. But that being said you know your life is very much in flux, your life is very much in transition and you know a couple of months as a young person can seem like forever whereas for an adult it just seems like a couple of months.

Michael Mancini: Are these findings sort of surprising to you as a youth marketing expert?

Max Valiquette: I don't think so. What we like to say at my company is that the sort of big explosion that we had in youth culture from the Internet and from wireless and also just from a more youth oriented society I think in a lot of ways really just put the lens on youth culture. I think a lot of these values have been constant for a long time. I think a lot of the things that young people look for, the same things that young people looked for 40 or 50 years ago, it's just now, it's much more vocal and much more accessible to them. They're much more empowered in making their values and their wants and their desires turn into reality then any previous generation of youth has ever been.

Michael Mancini: I want to look at that a little more. How are buying patterns changing among young people, from say 10 years ago?

Max Valiquette: The single biggest difference is that they're more in direct control of the money that they're actually spending either because they're working more and making more of that money or because their parents from the time of when they're quite an early, at an early age their parents are simply too busy to do a lot of that shopping themselves.

And I think there's a little more trust but also a little more necessity from how parents deal with their kids and the money that they spend. I think money on an as needed basis to young people certainly in North America is at an all time high.

Michael Mancini: So how do you think this change is affecting the way marketers sell their products to youth?

Max Valiquette: Well from a very early age now marketers are moving from what we would call a gatekeeper strategy to a gatecrasher strategy. Meaning instead of going through the parent who is the gatekeeper they tend to go directly to the young person who is that quote, unquote gatecrasher. And we see this in a lot of ways.

So you can have an impact on household purchases by marketing directly to the young person rather than necessarily by going to their parents. You no longer necessarily have to have an adult oriented message that lets parents know that this brand is okay. Instead mom and dad are willing to let their kids go and essentially by what it is they want. So there's a lot more directly youth focussed messaging both in terms of products aimed directly at young people and also household products that parents might be buying for them.

Michael Mancini: Interesting, are we seeing this across the board or really for certain niche products?

Max Valiquette: Absolutely everywhere. In fact there are studies that are pretty widely available that talk about young people even having an unprecedented level of influence over purchases like household electronics or even the family car.

Michael Mancini: Wow. Now do you think that the picture you just painted sort of could reasonably apply to youth internationally too? Are we talking about North American audiences predominantly?

Max Valiquette: I would say we're talking about predominantly western audiences or westernized audiences. Obviously in, in developing nations disposable income simply isn't that high. I mean it's going to have an impact on how everything works. That being said you know I think there's a lot of really strong evidence as to youth culture moving very globally now and while income levels have a huge impact on that, we're still moving to an era where within a very short period of time most of the world is going to be connected if it chooses to be. And I think frankly young people are going to lead that charge. So I think a lot of these trends on purchase habits and consumer habits that currently exist only in the west are actually going to move to other countries with young people first.

Michael Mancini: Yes. Now obviously we're, right now we're undergoing sort of a fundamental economic shift.

Max Valiquette: I've read about that.

Michael Mancini: How is that affecting the way marketers market to youth right now?

Max Valiquette: It's crushing marketing dollars everywhere across the board. And still for some marketers a direct connection to young people seems to be harder to, hardest to justify. It's funny, people always talk about you know what, what marketing is, is responsible for. And I think people are sometimes very quick to sort of blame a lot of the problems of business and the problems of marketing and tend to think of marketing as being the sort of leading thing.

But the truth is marketing doesn't lead at all. It's actually an unbelievably unoriginal industry. By our very nature we listen to what consumers are saying, we pay attention to what's going on in the market and then we respond to that. And because of that, because the industry is kind of unoriginal there are a lot of long-standing ideas as to how marketing works that people have a tough time breaking away from.

And one of them honestly is that young people just don't have money to spend. It's absolutely not true. You know they're by and large not spending money on rent, they're not spending money on some of the larger purchases that adults do. They have a smaller number of categories in which they feel the need to buy things. They're value conscious in those smaller number of categories. But it means in a couple of really key areas young people spend a ton of money and still some marketers think that that's just not the case. And so when their budgets are being cut, the first thing that they're doing is cutting their youth marketing dollars. And it's a mistake really, it's an absolute, absolute mistake.

The great thing is that if you can actually make a strong enough connection between your brand and the young person, a lot of the work you have to do for them years down the road is done for you. You've established that strong connection early on in their lives. The problem for a lot of marketers is that they don't realize that. And no one in this day and age has the corporate freedom to think anything beyond the current life cycle of their business. It's what's going on this quarter, what can I report back to my shareholders this quarter.

But it's still possible even though young people can be fickle and other brands can bring them away. It's still possible to create really good, strong, long-term brand equity.

Michael Mancini: Right. So what are some solutions then, what are some great ways – and inexpensive ways maybe even – that companies can reach youth markets internationally or here in Canada?

Max Valiquette: I mean the number one thing to do is to get online and to establish a strong online presence. It is still the cheapest form of media and it gives you absolutely unlimited worldwide access which is fantastic.

A lot of brands on the, the problem is a lot of brands don't behave globally or don't think they should behave globally. So a lot of larger brands think about how they manage from regional office to regional office to regional office. But the future of marketing for worldwide brands is establishing a single unified worldwide voice and making that work for you as strongly as you possibly can.

And then number two is to start thinking about a brand as the sum total of the experience that you provide to your end user or your consumer, meaning whether you're a soft drink or a video game, fundamentally you need to be thinking about what's your brand about and how do you want to communicate that brand experience to your consumer. With a video game it's relatively easy one could say because you really want people to actually play the game and that's the experience.

But you know what's the brand equity in a soft drink, what does Coca Cola need to do, and this is their challenge, what do they need to do to connect with young people? It's more then just about when you pop open a Coke and drink it. What else is that brand about for young people?

Michael Mancini: So once you're online I mean what, what about the online world does that?

Max Valiquette: Well I think you're going to see brands making more interesting online experiences. Right now one of the brands that does a really terrific job of that is Burger King which has actually managed to do some really great marketing. Much of it happening online and much of it very youth focussed. In fact Burger King for a long while seemed to have a sort of mom and family strategy going on. And then I think they realized that actually a direct connection to a young person makes sense for their brand. They didn't necessarily have to be McDonald=s and sort of always present this kind of family restaurant image.

Instead I think, I think Burger King realizes that, or has realized that they could, they could sort of push the envelope a little bit. So they found a really great agency and that's Crispin Porter and Bogusky who were I believe advertising agency of the year last year. And they do really great online work that is very youthful and very youth-focussed and sort of helps make Burger King this interesting challenger brand to McDonald's that's a little bit offbeat and less corporate than McDonald's.

So you know Burger King just did this really interesting promotion on Facebook where they would actually reward you with a free Whopper for getting rid of Facebook friends you don't talk to.

Michael Mancini: So what role does social networking play in all this?

Max Valiquette: Well it's right now very much not to overuse a cliche but I guess I'm about to, it's very much fishing where the fish are. And what smart marketers need to realize is yes, all sorts of people young and old, but it's a massively youth driven trend, are going, getting on line through social networks, Facebook being the biggest example of it. But there's all sorts of them, still you know My Space and in some parts of the world it's Friendster and in some parts of the world it's Orchid.

But let’s use Facebook as an example, cause there's about 150 million Facebook users worldwide and the 15 to 35 year-old demographic is by far the largest represented in there. You know what a good marketer should realize is that you need to provide an experience that makes sense to that customer's life in their Facebook world rather than being all about your brand.

Which is to say you know Burger King didn't think lets go make a Facebook group called “I Love Burger King” and ask people to talk about how much they love the Whopper cause that's horrible and that doesn't make sense. But that's very much how a traditional marketer would think. Instead, Burger King thought what is something interesting we can do with Facebook so that when a Burger King icon pops up in somebody's news feed it's not saying five of your friends love Whoppers. Instead it's saying five of your friends deleted Facebook friends they never actually talk to so they could get a free Whopper. Well that's an interesting and relevant news item in my Facebook feed and that makes me think more positively about Burger King.

And it's a great idea, it was unbelievably inexpensive in that I think they just built a Facebook application and their own website which it linked to. But there was no actual fee paid to Facebook for any of that to the best of my knowledge. So not expensive, didn't take a huge amount of time, really interesting, created an ancillary PR value too because a lot of people reported on this thing, so it lived sort of above and beyond just being on Facebook. I think it's really important to do things like that. And those ideas are what really makes marketing sing.

Michael Mancini: Right. So how time consuming is it you know having a presence on Facebook, keeping up your online presence and creating these online experiences?

Max Valiquette: It can be extremely time consuming but it's still, but it's still cheaper then what we would call traditional marketing. You know I, there's been a lot written about the, obviously the marketing of the last presidential election. But I really believe in my heart of hearts that one of the things that got President Obama elected was a great social networking marketing strategy. You know he hired Chris Hughes who is essentially the number two at Facebook to run his social marketing campaign. And had 3 million Facebook supporters compared to John McCain's 300,000.

In the 13 or 14 years now that I've been following youth marketing this is the first election I can think of in the Western world that had a greater number of youth voters then the previous election to it.

Michael Mancini: Wow.

Max Valiquette: And I think you know there was a great social marketing strategy there that worked incredibly well.

Michael Mancini: The word experience I find intriguing because are there ways to capture these sorts of experiences that aren't necessarily online and is that another option too for small companies?

Max Valiquette: Well and you know I've been remiss in not talking about it. I think the other form of marketing that is growing is this idea of what people are calling “experiential marketing.”

So yes, you know we're seeing things like you know concert tours that are, that are sponsored and well activated and festivals and brands that take over an entire night club, or an art gallery for a night and put on some kind of great show, secret shows and concerts that happen. Some kind of weird interactive billboard that happens. All this kind of stuff, that idea of a brand experience, of doing something really neat in your environment, that's the other part of marketing that's just going to get bigger and bigger.

It's really, it's really traditional marketing, television, radio and print that is in the most trouble right now. But online will continue to grow and branded experiences will continue to grow as well.

Michael Mancini: Now I know you have a crystal ball on your desk.

Max Valiquette: Yes.

Michael Mancini: What's going to happen in the next five to ten years? How is this all going to change? I love that I just asked an incredibly unfair question.

Max Valiquette: No, it's, you know it's a fine question to ask because everybody asks it. And no one has, no one has a really, really, really good answer. I don't think three years ago anyone in marketing was anticipating that we'd be where we are right now. But you know what's going to happen is what's currently happening is that marketing will continue to react to the forces of the world around it, both in terms of the budgets and constraints that were given by our clients, and the fact that marketing is fundamentally responsible to a reaction in consumers.

We market because of how consumers are reacting and then we hope to create a reaction in them from the marketing that we do. And fundamentally it means that over the course of the next five years the same thing is going to happen, marketing will be very reactionary and very responsive to what consumers are doing.

So specifically I think I like to answer the question by therefore looking at consumer behaviour. And so what are consumers doing, well they're watching less television in traditional TV formats, they're listening to less radio in traditional radio formats, so look for marketing to respond to that. As broadband connections get stronger around the world look for more rich media to be created that exists online. We're moving into a sort of 24/7 media landscape where you know your computer can be the place where you do work or where you watch television or where you plan your vacation or where you go shopping. And so look for marketing to increasingly exist in that sphere.

And hopefully you know look for marketing to understand it's role a bit better. And make sure that the kind of connections they're trying to form with consumers are appropriate.

Michael Mancini: Max I really appreciate this.

Max Valiquette: My pleasure.

Well, that’s all for this podcast edition of CanadExport. Don’t forget to subscribe. You might also want to visit the Canadian Trade Commissioner Service website to find out how the Canadian Trade Commissioner Service can help you target youth markets internationally.

I’m Michael Mancini, signing off for now.

To download our other episodes, just go to www.canadexport.gc.ca or go to iTunes and use the searchword “CanadExport.”

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