Institutional Investors Hone in on the “S” in ESG Investing

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As asset managers targeting the institutional market try to differentiate, many are incorporating ESG (environmental, social and governance) factors in their investment strategies to varying degrees of success. Currently, few US institutions are incorporating ESG factors in their portfolios, but use is considerably higher in the non-profit sector, where institutional investors are more apt to seek investment strategies that align with their organization’s mission.

Within the broad category of ESG investing, the individual components draw institutional investors for very different reasons. When institutional investors are asked to identify the reasons they are most likely to adopt ESG investing, the majority of pensions and non-profits point to social aspects including diversity, human rights and consumer protection.

  • Environmental aspects, including climate change, nuclear energy and sustainability, resonate more with non-profit institutions.
  • Governance, including management structure, employee relations and executive compensation, is more of a draw for pension investors.
  • The social component of ESG investing, encompassing aspects of diversity, human rights and consumer protection, is of particular interest to tax-exempt organizations and investors representing public DB and Taft-Hartley pensions.

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Ideation: Bringing Home the Bacon

Bacon? Bacon, bacon, BACON!

Wait! What do you mean you were only joking? I can’t actually buy bacon-flavored mouthwash? What a cruel April Fool’s Day joke. In a stunt that has gone viral on social media for a couple of years now, Procter & Gamble seems to be unveiling bacon as the latest in trendy, savory flavors for mouth refreshment.

Sticky Ideas

How did this new product hoax go viral while so many other new product launches fail to succeed? In the Heath brothers’ book “Made To Stick,” they lay out a communication framework for lasting ideas:

Success =

  1. Unexpected: Get people to pay attention. Bacon-flavored mouthwash vastly differs from the typical mint flavors that it inhabits a space all its own.
  2. Concrete: Understand and remember it. I saw a picture of the packaging and could visualize the product sitting on the store shelf and in my medicine cabinet at home.
  3. Credible: Agree and believe. The product had its own website and it’s on Facebook (so it MUST be true!). Also, the longer it perpetuated after April Fool’s Day, the more believable it became.
  4. Emotional: There are some who care deeply about bacon and there are those, like me, who just salivate Pavlovian at its mention. Bacon elicits an emotional response.
  5. Story: The call to action to soon purchase at a store near you prepped us to buy and participate.

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Fortnite: Category-busting social phenomenon or pesky addiction?

Fortnite: Category-busting social phenomenon, or pesky addiction?

I live in a Fortnite house. My ten-year-old son discovered the game soon after its launch and has played it regularly on Xbox and mobile with his friends since last spring. On many mornings I have had to physically separate him from the controller (and his online friend crew) and usher him off to school. On countless evenings I have prepared chicken dinner while surrounded by the sounds of him battling and building his way toward “Battle Royale” wins. The Duo and Squad battles are the loudest, with my son and his friends shrieking in excitement with every giant sniper tower constructed and every enemy vanquished. Oh, and I mustn’t fail to mention the player dances—“emotes” that a player’s avatar can perform on-screen during a battle, not seemingly adding to a player’s ability to win but adding notably to the game’s fun factor. If you were anywhere in public in 2018, you likely saw kids and young adults breaking out into one of these dance moves—among them Take the L, Make It Rain, and my kids’ favorite, Floss.

How Fortnite Is Changing the World of Gaming

Fortnite is not just a game; it’s a social phenomenon connecting its players via the game play itself, the emotes, the live chatting, and the ability to play via various gaming platforms, both console and mobile. If you have any kind of gaming console, computer or mobile device (and your partner or mom gives you the A-OK to play), you can play and be a part of a huge global community. Continue reading

What Is the Value of “Big”?

Years ago I participated in a colleague’s ongoing thought experiment by naming the price point at which something is expensive. My colleague wanted a crisp response without caveats but I couldn’t do it. My first thought was $100, but even then, that was cheap for a flight and expensive for a meal. I’ve revisited the question over the years and despite changing life circumstances, my resistance to naming a number has persisted and even increased as I’ve encountered more examples where it’s all relative. Messaging is rife with caveats, including—and perhaps especially—in the wealth management space.

Is an asset manager big when it serves thousands of clients? Manages billions of dollars? Has been in business for decades? More importantly—and this is the part that is often missed—are these numbers relevant to the customers the firm is trying to reach? Are the numbers communicated with the proper context to make them understandable?

We have ample data to show that the words we use are not always well-understood. For example, see this article from my colleague, Vivek Amin, that describes the dismal self-reported knowledge of fundamental financial terms. I’ve encountered plenty of instances where terms are not well understood by financial professionals either. This lack of understanding extends to numbers. While a number itself might not need defining in the same way, we can’t assume it always has meaning. Industry insiders know when a number is impressive because they have the context. Outside of context, a number is no better than jargon. Continue reading

Pinpointing Growth Opportunities in the Institutional Market

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While an understanding of current asset allocation practices is always valuable for asset managers, uncovering the asset classes institutional investors will look to in the future provides key insight into potential areas of growth and opportunities to expand a firm’s share of institutional assets. This year’s US Institutional Investor Brandscape report includes an analysis of anticipated changes to asset allocation by asset class, uncovering the areas of most demand for future mandates.

Overall, demand for active fixed income and alternatives is on the rise among both pension and non-profit institutional investors. However, breaking down each group’s top three asset classes poised for growth in the next three years shows pockets of even greater opportunity. It’s important to note that these figures represent the percentage of institutional investors forecasting changes in their use of particular asset classes and NOT the percentage of assets they are likely to move.

Pensions

US fixed income, both actively and passively managed, will continue to be in demand among pension investors across all asset size segments in the next three years. Notably, the use of alternatives is attracting more interest among this group this year than in the past, with an expected net increase of 24%. $1 billion-plus pensions report the highest anticipated positive net change in alternatives (35%) and passively managed US fixed income (33%), indicating rich opportunity for asset managers. An increase in one asset class inevitably leads to a decrease in another—24% of pension investors intend to draw down their allocation to US equities in the next three years, a trend from previous years. Continue reading

The Hope That Fuels Pharma

The Hope that Fuels Pharma

The Emotional Investment Behind the Development of New Therapies   

Like the old TV commercial, I sometimes joke, “I’m not a doctor but I play one on TV.” What I really do is healthcare market research for the pharmaceutical industry, which requires a deep understanding of many diseases, diagnostics and treatments. I help pharmaceutical clients understand what patients need and how healthcare providers make decisions.

Sometimes people are judgmental about the pharmaceutical industry…

I know that healthcare is a hot-button issue. I understand, because the high cost of drugs for patients and families is something we hear echoed by both patients and physicians in research all the time. Physicians often provide the caveat “assuming insurance will cover this…” before explaining how they would approach prescribing a drug or when describing product preferences. There’s no doubt that this is an important issue, but in my experience, the motivation to market drugs is not all about money.

…But they may feel differently if they saw the passion that I see daily.
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The Value of Brand Trust to Utilities

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In competitive markets, brand strength has long been associated with positive business outcomes, including growing revenue through increased market share, elevated pricing power and higher customer loyalty. While market share and customer loyalty haven’t historically been things utilities think about, they are taking on a new strategic importance as the tectonic plates underpinning the 21st century energy market continue to shift.

Utilities are beginning to manage their brands to support the new market challenges they face—from implementing new rate structures to figuring out how to sustain financial growth. Successfully navigating these challenges requires strong brands with enough emotional leverage to persuade consumers to come along on the journey to a new energy future.

Our Utility Trusted Brand & Customer Engagement study, now in its sixth year, focuses on the impact of brand on customer engagement for the utility industry, making Market Strategies-Morpace the undisputed leader in brand insights for utilities. Through this research, we’ve identified three elements of brand value for utilities:

  1. Enhanced pricing power via customer support for higher rates.
  2. Revenue growth by capturing market share for new product offerings not protected by the utility’s monopoly position.
  3. Lower risk of customer and load defection as customers consider distributed energy resources and dis-intermediators.

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Superpowers and Princesses: A Three-minute Lesson on Projective Exercises

Superpowers and Princesses: A Three-Minute Lesson on Projective ExercisesProjective exercises—the presentation of calibrated stimuli onto which a respondent projects their feelings, attitudes or beliefs—are a critical asset in the qualitative researcher’s emotional toolbox. The technique offers the promise of achieving greater depth and validity of insight by facilitating expression of subconscious or difficult-to-articulate feelings that are less accessible using direct “Q&A.”

But what makes for a good projective exercise?

We put learning into action at a recent market research conference by testing a series of probes that revealed some lessons about projectives.

First, we asked visitors to our booth to help us learn about, “What makes great qualitative research.” We then invited them to post onto a chalkboard their reactions to a probe related to the goal of understanding how to deliver great qualitative research. Our lesson on projectives focuses on contrasting two of several probes that we asked:

  1. What is your qualitative superpower?
  2. What Disney princess would make a great moderator?

Before reading on, what do you notice about these questions? Is one easier for you to answer? Do you suspect one would elicit superior insights vs. the other? Let’s explore what we observed and discuss why one question might better achieve the promise of projective techniques. Continue reading

The Power of Brand Identity Research

The Power of Brand Identity ResearchEvery impression counts when promoting and maintaining a successful business, and managing your brand identity is a major factor in that success. Whether it’s your logo, your website or your business cards, your customers build an impression of your company through every interaction they have with it. Each touchpoint adds up to create your brand image. But in today’s dynamic digital market, customers have more ways than ever to engage with brands.

New and evolving technologies demand that businesses account for the myriad of platforms that can promote as well as demote their brand. Brand research across a diverse range of markets has shown that your customers’ opinions, needs and expectations can turn on a dime, particularly in the court of social media. As a result, the challenge for businesses is to navigate these platforms to ensure they don’t get lost in the crowd, or worse, stand out for all of the wrong reasons.

What Is Brand Identity and Brand Image?

Brand identity is the way a business defines itself to their target audience. Every element that helps define your brand, from name and logo to color scheme and even the language you use to communicate with your audience come together to create your overall brand identity.

On the other hand, your brand image is the perception that customers have of your brand. It is the aggregate of every experience, interaction and association that people have with your organization. Continue reading

Going Beyond Consideration

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Understanding the Institutional Investor Journey When Selecting an Asset Manager

Institutional investors yield considerable decision-making power and often involve an extensive list of resources in their process of vetting and hiring a new asset manager. The firms vying for attention need to effectively differentiate yet not over-complicate their unique value propositions. Given the intensity of competition in the institutional market, asset managers need to make the most of every potential mandate to position themselves to win new assets. While many struggle with the challenges of building brand awareness to even get a chance to be considered, the most successful firms arm their sales, relationship management and product teams with insight on the decision-making process in order to maximize their opportunities of being selected.

Common triggers prompting asset manager searches include multiple periods of underperformance, investment team turnover, style drift, and corporate merger/acquisition activity. That said, new-manager hires are not always the result of the need to replace an incumbent, as institutional investors and consultants are open to opportunistic searches for new strategies that could enhance the overall portfolio. While performance and price along with familiarity and strength of the brand are integral in the evaluation of asset managers, a variety of more subjective factors weigh heavily in the final selection decision.

In the process of hiring an asset manager, all institutional investors follow a similar journey, with each type bringing its own nuances to the overall process. Along the journey, asset managers can leverage a number of points of influence to maximize their potential for selection. The people and additional sources of information also involved in the journey vary by type of institution, offering opportunities for asset managers to target their ongoing outreach to specific audiences. For example, consultant recommendations are by far the most influential factor for defined benefit (DB) pensions, yet peer recommendations, either formal or word-of-mouth, can be a gateway for endowments.

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