What’s the difference between the positioning of a product (like Milk Duds) and the positioning of a service (like Western Union’s Mailgram)?
Not much, especially from a strategic point of view. Most of the differences are in techniques.
In a product ad, the dominant element is usually the picture, the visual element. In a service ad, the dominant element is usually the words, the verbal element. (So if you saw an advertisement with a big picture of an automobile, you would assume the car was being advertised, not a car rental service.)
With a product like Milk Duds, the primary medium was television, a visually oriented vehicle.
With a service like Mailgram, the primary medium was radio, a verbally oriented vehicle.
Naturally, there are a lot of exceptions to these principles. If everyone knows what the product looks like, there is no advantage in using print, television, or other forms of visual media.
Conversely, if a service can make effective use of a visual symbol (O. J. Simpson for Hertz, for example), then visual media can often be productive.
In spite of the exceptions, it’s surprising how often these visual/verbal generalities hold up. In a four-way test of newspapers, magazines, radio, and television for Mailgram, the most effective medium was radio. But the essence of the Mailgram story is strategy, not media. Before discussing strategy, it may be helpful to take a look at how the system works.
Developed jointly with the U.S. Postal Service and inaugurated on a limited experimental basis in 1970, Mailgram is the nation’s first electronic mail.
To send a Mailgram, you call Western Union, which transmits the message electronically to a post office near the recipient. The Mailgram is delivered the next business day.
In addition to sending Mailgrams by telephone, the customer can also send them by telex, TWX, magnetic tape, computer, facsimile equipment, or communicating typewriters.
Why belabor the technicalities? Why discuss the complex details of the Mailgram system?
To make an important point. Most advertising programs never go beyond the details of the product or service which is offered for sale. And the more interesting and complex the service is, the more likely this will happen. The marketing people who are responsible for introducing the product get all wrapped up in the service and forget all about the customer. As a matter of fact, the traditional approach would have been to introduce Mailgram as a “new, automated, computerized electronic communication service” or something of that sort. (Western Union spent millions on computer programming alone, not to mention the enormous expense of earth stations, satellites, etc.)
Regardless of how much money you spend, regardless of how technologically interesting your service is, to get inside the prospect’s mind, you have to relate to what’s already there. You can’t walk away from your existing position in the prospect’s mind.
And what’s up there in the prospect’s mind? The Telegram, of course.
Anytime you mention the word “Western Union,” the average mind conjures up the most famous yellow message in the history of the world. And the “gram” part of the Mailgram name only reinforces this perception.
So what’s the difference between the new gram and the old gram?
Well, the main difference is price. Both have the same telegraphic format. Both demand immediate attention. But the yellow Telegram message is three times the price of the blue and white Mailgram message.
So the positioning theme developed for Mailgram was simple: “Mailgram: Impact of a Telegram at a fraction of the cost.”
At this point, someone said “Wait a minute. Why position Mailgram against the Telegram, also a Western Union service? Why take business away from ourselves?
“Furthermore, the Telegram is a declining business. Why compare a new, modern service like Mailgram with an old service past its prime? The Telegram still has an important role to play, but it is not a growth business.”
The logic is impeccable. But as often happens, logic is not necessarily the best strategy for dealing with human minds. Still, the logic was so sound, it was worthwhile rethinking the concept. Especially since there was another positioning strategy that also had merit.
Actually the Mailgram name itself suggests a second positioning approach. We could relate the Mailgram to the U.S. mail.
Then, too, if Western Union wanted the Mailgram to take business away from another service, the numbers suggest it would be much better to position the service against regular mail.
In a recent year, 68 billion first-class letters were dropped into the nation’s letter boxes. That’s 815 first-class letters per household per year.
The Telegram generates only a tiny fraction of that kind of volume.
So a second theme was developed: “Mailgram: A new highspeed service for important messages.”
Which is the better approach? In spite of the negatives, positioning theory suggests that the “low-cost Telegram” is a better direction than the “high-speed letter.” Yet Mailgram was too important to Western Union to make a decision based on judgment alone. So both campaigns were test-marketed using computer data to track results.
The test itself was a massive one. No tiny markets like Peoria were even considered. The six Mailgram test cities were Boston, Chicago, Houston, Los Angeles, Philadelphia, and San Francisco. All big, important communication centers.
Who won? Actually both campaigns were effective. Here are the data for Mailgram volume increases in the test cities during the 13-week program.
These numbers alone were enough to prove the superiority of the “low-cost Telegram” position. But what really decided the issue were the product awareness levels in the test cities, which were measured both before the program ran and afterward.
Here are the figures on how many people could correctly describe what a Mailgram was before the print and broadcast advertising began.
Statistically, not much difference. This indicates that the test market cities were pretty evenly matched. In other words, about one-fourth of the market already knew about the Mailgram service.
After the advertising ran, however, there was a big difference in the two groups of cities. Here are the Mailgram awareness levels 13 weeks later.
As unbelievable as it may seem, awareness in the high-speed letter cities actually declined. From 27 percent to 25 percent. (Not really statistically significant.)
Then where did the increased volume come from in the high-speed letter cities? Obviously from people who knew what a Mailgram was and were reminded to use the service by the advertising.
It was a totally different story in the low-cost Telegram cities. Mailgram awareness more than doubled. From 23 percent to 47 percent.
Not only was this a big jump, but the numbers suggest that Mailgram volume increases were likely to continue over a long period of time.
Western Union also measured Telegram volume in the test cities before, during, and after the advertising. They found that volume held fairly stable. In fact, the company felt that advertising the Mailgram as the low-cost Telegram helped rather than hurt Telegram volume.
And what has happened to Mailgram since the development of this advertising strategy? The volume numbers tell the story.
After 10 years of success, Western Union decided to change the Mailgram strategy. Instead of “impact,” the new strategy would emphasize “next-day delivery.” So they hired a new advertising agency to develop the new program.
Again, the volume numbers tell the story.
Rarely can you find such a clearcut example of the difference between good advertising strategy and bad. (Most examples are clouded by other factors.) But in the Mailgram case, the minute the strategy was changed, volume declined.
Your problem is not just one of developing a good strategy. Equally important is the courage you will need to keep hammering at the same theme, year after year.
