HOW TO CREATE EXPLOSIVE SELF-GENERATING DEMAND: THE SCIENCE OF BUZZ IS NO RANDOM PHENOMENON

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What do the following have in common?

Beanie Babies: Rather unremarkable small stuffed animals that can sell for thousands of dollars in secondary markets. The new VW Beetle: A quirky, spherical little retromobile that stopped traffic when it first appeared in the U.S. on Atlanta's Peachtree Street. 'The Blair Witch Project": A spoofy film concocted for a measly $30,000 goes on to gross more than $ 140 million at the box office -- a return on investment that brings tears to the eyes of competing film executives everywhere.

GENERATING THE HYPE

All three succeeded in creating word-of-mouth hype, which they then rode to explosive consumer demand. How and why did these products generate hype, as opposed to the thousands of other products also jostling for consumers' attention? Marketers and academics have been struggling with this question for decades -- and have yet to produce a satisfactory answer. Most often they give up and write off explosive demand as a random phenomenon due to irrational consumer behavior, beyond the domain of marketing.

But the phenomenon of hype-driven growth has its own logic, and McKinsey & Co. has created an approach that explains how to recognize -- and ignite -- word-of-mouth momentum that can lead to what the consultancy calls Explosive Self-Generating Demand.

ESGD occurs when consumers adopt a product primarily for social value -- or status -- the product confers rather than for the product's actual use value (Exhibit 1).

The ESGD approach has three parts: designing the product, seeding the vanguard and managing the adoption dynamics (Exhibit 2).

First is product design. ESGD products have two distinguishing attributes. First of all, they're edgy: They differ enough from the run-of-the-mill products to seize consumer interest. For example, last year's surprise summer theatrical hit, "There's Something About Mary" monopolized conversations for weeks by being unapologetically tasteless.

Second, they're what we call flashable, a trait that manifests itself in a couple of ways. An ESGD product can be highly visible -- think of the flip blues and greens decorating young women's fingernails and toenails -- compliments of Hard Candy. The polishes appear in the public gaze, and the public talks about what it sees.

Another ESGD product can confer status on somebody who talks about that product hipness by association. Chatting about Fox TV's "X-Files" at the water cooler on Monday morning reveals that the speaker is wired in to Chris Carter's paranoid, self-indulgent TV series.

DIFFERENT QUESTIONS

The lesson is that testing for ESGD market potential will require a very different set of questions and techniques than those of traditional market research.

The second part of our ESGD approach centers on seeding a marketer's product with the right vanguard (Exhibit 3). Prevailing wisdom contends companies must market a product directly to the consumer group with the greatest need for it. But remember: ESGD dynamics are driven by social factors, not inherent need.

So the magic in setting off ESGD springs from figuring out which vanguard consumer group will wield the greatest influence over the other consumers -- and doing whatever it takes to get your product into the vanguard's hands.

Fashion houses have long recognized the value of giving their designer gowns to Hollywood stars and First Ladies. Other businesses have started to figure this out; one leading fashion retailer deliberately hires the most popular high-school kids to work in its stores -- and hence wear its clothes.

Finally, our approach calls for businesses to manage the adoption dynamics of the ESGD product actively over time. Because different consumer groups adopt an ESGD product for different reasons, and at different points in time, customized marketing approaches will be needed to cross the chasms between adopter groups (Exhibit 4).

Marketers need to sequence their tactics around product supply, distribution channels, and flash venues, with all of these factors changing with the dynamics driving the adoption curve. For example, Ty substantially evolved its marketing over time for Beanie Babies (Exhibit 5).

Yet Ty has never spent a single dollar on traditional advertising campaigns for Beanie Babies!

The bottom line: Businesses need to get hip on hype -- or risk being drowned out.

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