Understanding Marketing Signaling—and How to Get Yours Right

Your brand has an identity. You’ve got logos, taglines, brand colors—the works. There are people—possibly YOU—whose job it is to be on top of your brand’s marketing. Despite all these things, it’s possible your marketing is sending out signals you don’t intend. Or perhaps you’re under-leveraging the power of marketing signaling and it’s hurting your bottom line.

What is marketing signaling?

In its simplest form, marketing signaling is any communication that provides information beyond the mere form of a message. An easy example is price. Higher prices generally signal higher quality.

But many of the things we want to know when we are buying a product or service, especially for the first time, are not directly perceivable. Customers often have far less knowledge of the true value of a product than the company they are buying it from. This is often a gap between reality and perception. Signaling can be a bridge to close that gap.

A good, instructive example of this is Hyundai’s entrance into the US market in 1986 with the inexpensive Hyundai Excel. It was very well received initially because of its low price point but ran into major quality problems as Hyundai struggled to maintain their competitive pricing advantage. Eventually Hyundai just became known for making cheap cars and lost their value proposition. It got so bad that by 1998 Hyundai was laughingly referred to as Hope You Understand Nothing’s Drivable And Inexpensive.

Unbeknownst to the market, Hyundai had embarked on an extensive internal effort to significantly improve their entire car line’s product quality. The problem they faced was no longer to improve quality, it was to improve their reputation. To do this, Hyundai came up with a very clever signaling strategy. They decided to offer the best car warranty in America.

This bold signal to the market provided a level of confidence to consumers to rethink Hyundai. It wasn’t just a better warranty; it was the best in the entire industry. They met the criteria of effective signaling, which generally involves an upfront cost to convey commitment with a heavy penalty if the signal is false.

If Hyundai’s signal had not been backed up with higher product quality it would have destroyed the company’s United States market strategy. Instead, because it was true, their sales rose 80% in 1998.

What is your web presence signaling?

One of the most common signal failures we see is with companies that have innovative, quality products, but dated websites, which send a clear signal to the market that they are nowhere near the cutting edge. This begins to trickle down with less effective SEO, which affects Google rankings, which begins to send a signal that they are not a leader.

Almost every element of marketing sends a signal. If you simply advertise, it signals a level of success that provided you with the financial capacity to advertise. It also signals your product has achieved a level of success that implies it is accepted.

If you regularly post well-produced, useful content, it signals you have a commitment to sharing knowledge and are likely a thought leader. In addition, B2B buyers have come to expect it, so this signals you are in touch with their expectations. Their engagement with blogs during the purchase process is up from 66% to 71%. If you aren’t creating informative content, it signals to them you aren’t committed to them.

There is a concept of information asymmetry that is almost always at work in the buyer seller relationship. The web has provided a much better opportunity for the buyer to close the gap between what they know and what the seller knows. Search, online reviews and related information-sharing have leveled the playing field.

Companies that are committed to transparency and honestly communicating with their customers on a regular basis tend to view marketing as an investment rather than an expense and rarely fail to understand the importance of the market signals they send.

How signaling helped our client raise millions

In our work with the University of Minnesota College of Education and Human Development, we recognized that they were perceived to be a good land grant University college. The reality was they had the number-one ranked child development institute in the country and were pioneers and thought-leaders in educational psychology, special education, and issues around the achievement gap, and had an impressive portfolio of groundbreaking research that could benefit people all over the world.

To send a signal that this college was a global leader, we began a blog called Improving Lives that provided insights from their research faculty written in an accessible way. For example, a parent with an autistic child or a struggling reader could immediately use the information. This blog was read in over 100 languages in almost every country every week for 8 years. It was a clear signal that the University of Minnesota College of Education and Human Development was a world-class thought-leader – and its fundraising campaign reflected that, exceeding its original goal of raising $100 million.

Ready to look closer?

At SCG, we signal our commitment to our clients by wanting to be held accountable for results. If your brand is a market leader or category disruptor, we’re ready to apply our proprietary approach to your marketing to make sure it’s signaling what you want. Contact us to talk about how we can help.

Last edited: 5/12/2021