What’s New? Ask Steve Hoeffler
Professor Assesses Radically New Products, Consumer Preference Development and the Science of Corporate Societal Marketing
Atop a filing cabinet in Steve Hoeffler’s not yet completely unpacked office is what you might call a laptop with a sidecar. Connected to the IBM unit is a pad of paper atop an early version of a digitizer pad — a flat screen on which the user can write with a pen that sends an electromagnetic signal to the digitizer pad below — which creates a hard copy of the notes as well as a bit-map that transfers the image to the laptop. IBM never quite perfected an ability to turn these notes into, say, a Word document, Hoeffler says, and discontinued the product after initial sales faltered.
But the computer remains as a monument to one of Professor Hoeffler’s research interests: the marketing of radically new products. During his professional career, he has studied and consulted with companies on the planning, positioning and even feasibility of new products whose distinctiveness (such as Procter & Gamble’s home dry cleaning product, Dryel) makes it difficult to predict how consumers will respond.
Hoeffler’s attraction to the new carries over into his career path, too. Last spring, he left the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill to join the faculty at Owen, where he teaches marketing. “I decided to make the move because I was excited about the direction that Owen was taking and I felt that the senior leadership at Owen was not going to rest until Owen had earned the outside reputation it deserves.”
When Inside Owen caught up with him in late September, Hoeffler was relaxed yet literally moving fast. He and his wife were getting ready for a final walkthrough of their new home the next day, then moving in the day after that. While the movers were still unloading boxes from the van, Steve would need to leave for the airport to attend an academic conference in Orlando. Amid everything else, there was also the not insignificant matter of the week’s lineups to set for the fantasy football league in which Hoeffler and other Owen faculty and staff are competing this fall.
Successfully juggling a number of tasks and interests has also been a familiar pattern with Hoeffler’s prolific research, which has appeared in the Journal of Consumer Psychology, Journal of Product Innovation Management and Journal of Marketing Research, among others. Along with the marketing of novel products, Hoeffler is interested in how consumer preferences evolve over time (why, for example, most wine drinkers start with sweet wines, then change their tastes to dry white wines and then eventually prefer red wines) as well as brand development.
Yet another of Hoeffler’s varied research interests dovetails with the emphasis at Owen on corporate social responsibility. Lately, a focus of his scholarship has been corporate societal marketing (sometimes also described as “cause-related” or “affinity” marketing).
In a paper co-authored by Hoeffler that appeared in the Winter 2006 issue of the MIT Sloan Management Review, societal marketing programs are defined as “company initiatives involving the provision of money, resources, and/or publicity to socially beneficial causes in a way that seeks to create an association in the minds of consumers between the cause and the company or one of its brands.”
Put more conversationally, Hoeffler says, “it’s a type of marketing tactic where you try to do well by doing good.”
Classic examples include American Express’ “Charge Against Hunger” campaign in which a portion of the proceeds from each transaction benefited a food bank in New York City. British Airways’ Change for Good program is another textbook case. Passengers on the airline were encouraged to donate leftover foreign coins from their travels, which British Airways then contributed to UNICEF.
The traditional view, articulated by such economists as Milton Friedman, is that the job of a company is to create profits and then allow shareholders to make decisions about what to do with the money. But societal marketing, says Hoeffler, involves a different philosophy that has now come to hold sway: “To build a brand, you need both the old and rational side that Friedman represented, but you also need to connect with people.”
Consistent with a growing body of research that shows that consumers respond more favorably to brands that have certain social-cause affiliations, corporate societal marketing has become so widely accepted that the primary question today for companies is not whether to go about it but how. And that has been a focus for Hoeffler, whose recent work suggests that a market research technique known as conjoint analysis can help companies predict what kind of affinity marketing program will yield the best return on investment for their brand.
Companies can use corporate societal marketing, says Hoeffler, to reinforce what their brand is known for (case in point: Home Depot supporting Habitat for Humanity), or to differentiate the brand, as with BMW’s “Drive for the Cure” campaign on behalf of breast cancer research. “Either way,” Hoeffler notes, “the approach should support your brand strategy. In BMW’s case, because their product was so heavily identified with men and they wanted to target women, adopting breast cancer as their corporate cause made strategic sense.
“Unfortunately, a lot of firms stumble into cause-related marketing and form ad hoc relationships based on, say, the CEO’s interests. They don’t always think about these things very strategically. Conjoint analysis is a method for firms to evaluate which causes to identify with and to test the propositions in advance.”
Market researchers have long used conjoint analysis to help companies predict the most effective configuration of attributes, such as warranty length, price or product size, for new products. Applying this technique to social cause marketing, researchers survey consumers and measure their responses not only to various realistic options for a company’s involvement in social cause marketing but also the company’s approach to marketing that cause — direct sponsorship versus monetary donation, for example.
What works well for one brand, Hoeffler emphasizes, might not work for another. But especially if they follow a careful, research-based approach, companies may find they have underestimated the potential bottom-line benefits of societal marketing, which can give a brand the edge it needs in a crowded, skeptical marketplace.
