Why Do Businesses Stray from the Proven Path to Making Billions?

I recall the adage, “Not advertising is like kissing someone in the dark… YOU know what you’re doing, but nobody else does.”

Market research tells you:

  1. If there are any kissable people in the dark,
  2. How to find them,
  3. What sort of kiss they would like, and
  4. How likely you are to enjoy it.

It is so, so easy for big businesses to make billions… why don’t they?

If research can tell you EXACTLY how to achieve your business goals, why doesn’t EVERY business do it?

THE FIRST, OF TWO REASONS, is that bad research has a GIGO effect (garbage in, garbage out). With most executives undertrained in how to brief research, appraise and assess its implementation, and interpret the findings (properly) in concert with strategic marketing know-how, research can simply go to waste.

The second reason is (in Warren Buffet’s words) because of “Corporate Cancer”… where arrogance, bureaucracy and complacency, combined with operational micro-thinking, dilutes or discounts the demand for, and reverence towards, market research.

In the high-profit, high-growth days of B2C (FMCG and Consumer durables), research was conducted with finesse, expediency, discipline, regularity and concise interpretation.

Nowadays, few executives demonstrate any respect for, tight management of, or scientific approach to the art of research … and the results speak for themselves.

We can all probably name brands that are weaker versions of what they were, and trace it back to a departure from the disciplines of marketing strategy built upon good research.

Where is the once-dominant Sharp brand? How long can Nestle last, relying on its long-term cash-cows? How out of touch and behind is Kellogg’s? What happened to Spillers? Where’s Ampol? Grace Brothers? Criterion Furniture?

The Hurdles to the Billions

Remembering that products don’t fail, businesses don’t fail, brands don’t fail… it managers making bad decisions who fail… It is possible to remove the hurdles for failure by opening business leaders’ minds to more productive and proven methods: Commissioning and utilising market research!

In 1983/4 when My Dog had failed to launch successfully for Mars, their Product Manager asked me for help. All I did was read the research overnight, and it was clear the positioning for the re-launch had to be “for fussy eaters”: 33 years later My Dog has not made less than $250M annual sales… simply founded on good interpretation of good research.

In 1994, simply reviewing the research data for Mersyndol revealed that 95% of sales came from the 5% of heaviest analgesic users, but Mersyndol loyal users were forced to buy another brand to avoid drowsiness. In a 20-minute meeting, my identification of this and suggestion of a “Mersyndol Light”, led to the launch of Mersyndol Day-Strength, that has generated around $200M p.a for the past 23 years.

All those billions came from objective interpretation of quality market research.

IF companies REALLY want the Billions, bad research won’t ‘cut it’.

Interpretation without the synergy of understanding strategic marketing science also won’t ‘cut it’. (e.g. Brand adoption theory, innovation theory, brand equity, brand loyalty, involvement, BCG Matrix, and about 100 other key models.)

But, with good market research… well planned, well conducted, well interpreted, and well respected and followed… the path to billions is simply “finding out what people want and giving it to them”.

How easy it that? So why don’t or won’t business leaders do it?

I think it would be healthy and beneficial for anyone to share thoughts, perceptions experiences, and concerns… or just comment…

 

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43 years of Marketing… And it struck me that I have been obsessed with perfection of application and implementation of marketing excellence for 40 of those years – holy hell!

To be fair, my blind faith in commercially-usable academic knowledge has been the major reason I have pulled off some record-breaking successes in my career… by simply taking proven marketing science and applying it.

So, it’s no wonder that my peers shake their heads in dour and reluctant tolerance to what we call the “dumbing down” of skills and knowledge in the world of Marketing.

In particular, we’ve seen an awful downward slide in the quality and output of market research… reviewing studies done for clients who should have known better, but didn’t.

Is it the client’s fault for not have the skills to be a discriminating buyer?

Is it the researchers’ fault for not setting a standard and mentoring their clients to understand the importance of asking the right people, the right questions, in the right way?

Is it the pure academics, devoid of commercial experience, who are to blame for not delivering the education necessary in marketing graduates?

Is it the academic institutions that should be kicked for appointing inappropriate teachers of marketing for the hundreds of students who are paying for, expecting but not getting, skills that will empower them in commercial marketing roles?

Where does it stop and who will stop it?

Applying some of the theories of Marketing, we might predict that the commercial world will ultimately reject the inferior products now being delivered by academia… forcing academic institutions to return to the belief that only working practitioners marketing can teach it,  which was the original springboard of Marketing into wide-spread fame.

In the meantime, the absence of properly trained Marketing strategists, and the substitution of operational trained under-educated executives TRYING to make prudent business decisions likely to leave many of them face-down in puddles of business problems that shouldn’t even exist.

Absolutely, and without exception, any business that has been successful, accumulated profits and held major market share, should NEVER, that is EVER, g broke, die, or even experience a failed product launch.

Only when management goes wrong, get arrogant, or complacent, of suffers belligerence and apathy borne of bureaucratic inefficiency, do organisations begin to struggle or worse.

And ONLY, when leaders are empowered with strategic marketing knowledge and input, as well as authority to act and utilise this knowledge, will market leaders stop going broke, losing to competitors, or make other terminal business management decisions.

The questions is three-fold:

  1. What proportion of executives are drowning in puddles?
  2. How many partially strategic executives are face-down in shallow water?
  3. And how nay are truly able to survive in the deep?

 

Glossary of Management Terms*

December 15, 2016

* “Glossary of Management Terms” did the ’rounds in the 80’s… but still brings a smile to many – enjoy!
Delegate: Pass the buck
Pending: What the hell do we do with this?
Delayed: Forgotten
Urgent: Panic
Extreme Urgency: Blind Panic
Frank and open discussion: Flaming row
Analytical projection: Guess
Forecast: Guess
Long Range Forecast: Wild guess
Scheduled: Hoped for
Deficiency Analysis: Pointing the finger
Ambitious: Ruthless
Strategy: Low cunning
Shrewd: Devious
Profit: Profit
Profit before tax: Loss
Deficit: Staggering Loss
Industrial by-product: Our waste
Environmental pollution: Other people’s waste
Pilfering: Theft by employee
Fringe benefit: Theft by executive
Terminal payment: Golden handshake
Supplementary statistical information: Padding

The two most common threats to big corporates can be ORGANISATIONAL and/or ENVIRONMENTAL.

 

As I’ve often said, “Companies don’t fail. Businesses don’t fail. Products don’t fail. Brands don’t fail… It is Leadership and Management that causes these to fail.”

 

In Woolworths case, their internal issues are their sheer refusal to believe that anyone outside their company knows anything worthwhile. It reminds me of the saying, “Only a fool knows everything” and Woollies, for all their admirable knowledge, expertise, and ability, are sailing 5º off course, right into the proverbial Titanic’s iceberg!

 

They stubbornly have refused the recent counsel of a previous CEO who has told the Board, that WOOLWORTHS has chronic “ABC Corporate Cancer” (a term coined by Warren Buffet that identifies the destructive combination of arrogance, complacency and bureaucracy). This is clearly observable when you consider their absence of strategic leadership in overcoming the long-running Coles Price war, their botched and re-botched Every-Day Reward loyalty programs, their high staff turnover in Marketing & Strategy personnel, and turnover of Chairman and CEO.

 

So THREAT No 1, the Denial in recognising the ORGANISATIONAL aspects of ABC, is sending WOOLWORTHS cascading towards disaster. They need to embrace a humility and adopt attitudinal shift to listening to and accepting external advice.

 

The often spruiked Einstein-quote of “Doing what you have always done, and expecting a different result is insanity”, might apply in the face of their diminishing success over the past 10 years.

 

Threat No 2 is an External One. WOOLWORTHS see Coles as their major competitor. While Coles struggles against WOOLWORTHS, Aldi is left to grow consistently at 7%+… Why can’t WOOLWORTHS see the writing on the wall, or at least the significance of this trend???

 

WOOLWORTHS (and Coles) have adopted the short-term, and brand corrosive pursuit of private label and house brands, at the expense of branded products. They have made enemies of FMCG companies that they should be partnering with to undo the generic attack on brand value. They should be encouraging brand equity development and new product development, and supporting brands in ways they never have than before.

 

Instead, they connive to squeeze what little is left in profits for their FMCG partners, forcing budgets dry, eliminating insights for NPD by research, or revenue for brand equity development.

 

So THREAT No 2, the Denial in recognising the ENVIRONMENTAL aspects of ABC, is undermining their own competitive advantage and market positioning, creating an industry and a market place that is becoming more willing to reject WOOLWORTHS as a preferred solution to its needs.

 

Inevitably, of course, the WOOLWORTHS Board will retire, fat on its Directors’ Fees. WOOLWORTHS senior executives will ‘migrate’ to other retail organisations, employed due to their position and political savvy, rather than their failure to save WOOLWORTHS, and WOOLWORTHS will become a company that older people “might remember”.

 

It the poor shareholders of WOOLWORTHS , the faithful investors who trusted the Board and senior executives, for whom I feel sorry; particularly when WOOLWORTHS could return to favour dominance and mega profits, by simply jumping form their self-imposed pedestal and holding cap in hand.

 

NB: WOOLWORTHS were offered a means of generating $400M is EBIT p.a. in 2007… and two senior executives individually approved the concept… but shuffles in management and politics… combined with insurmountable corporate arrogance quashed that concept regardless. Now they’re in trouble – go figure!

When I was a boy, and asked “what do you want to do when you grow up?”, instead of saying fireman or policeman, I would say, “Be a time & efficiency expert”… having evolved into the quasi wish-come-true version of that, I find it enormously frustrating to watch, and doubly frustrating when my assistance is refused, because I can see the solutions, or alternatives, for businesses in trouble.

All around, I see businesses doing it tough, going bad, or just struggling. Other businesses appear to be raking in sales, but losing money through habitual and comfortable routine inefficiencies.

Sadly, bogus consultants, operational ‘experts who have failed to help’ and snake-oil sales folk, have all tarnished the promise of salvation, so these struggling companies – so close to the trees they can’t see the forest – struggle on… doing what they always do, and getting the results they have always gotten. 😦

Years ago, I came across research into how to stop a business bleeding, and how to turn it around, that is summarised below in 8 points…

  1. Accept you must do things differently
  2. Stop & plan: Work on the business, not in it
  3. Listen to your customer service & sales people
  4. Re-evaluate the capabilities of your advisors
  5. Listen to customers
  6. Study your closest competitors
  7. Milk every asset, call in every favour
  8. Move out of your comfort zone

But there are MANY ways to skin a cat.

I remember being served “Cuy” (cooked guinea pig, a Peruvian delicacy) in Peru at the bottom of Machu Picchu…. Having just finished the trek and in celebratory mode, I recall eating regardless of the fact it looked and tasted like rat (and probably was).  The point is, that if you can identify a different market, and position a core product in a different context, you can satisfy new customers with old capabilities (even that pesky kitchen rat!).

THIS is a skill that is beyond operational thinking. It is the domain of power for creative strategists. and goes to the heart of most of the 8 points above.

When executives, who are struggling, say, “we have leading industry experts on our Board and they can’t do anything” or “I can’t afford consultant right now”… yet their inner voice tells them they are headed for doom, these 8 points may be the wake up call necessary.

Better Sales from Marketing

Business people share a lust for sales. Great sales! Extraordinary sales! Record-breaking sales.

“How to get better sales” preoccupies them, drives them, absorbs them.  They pine for profitable sales, AND they crave sales that are as easy as possible.

Business turned to academia… Economics couldn’t

Economics couldn’t conjure up sales. Accounting couldn’t stimulate sales or forecast accurately. Finance couldn’t initiate faster, better or increased exchange…

So, from the insatiable hunger for ‘more’, NEED spawned the science of “Marketing”.

The Business Reason Behind “Marketing” as a Profession – How to Consistently Grow Profitable Sales?

In the 60’s , the discipline of modern-day “Marketing”, as a specialist profession, was really born. Out of the School of Economics, studies of true business successes were initiated when Industry said, “We want to find out why sales progress, and how to

Out of the School of Economics, studies of true business successes were initiated when Industry said, “We want to find out why sales progress, and how to re-produce these sales successes”.

Empirical academic studies and practical, industry-sponsored studies, quickly identified key models and concepts that became cornerstone to modern commercial success: Everyday tools to business strategists and marketing directors of successful companies around the world. A database of all the profit-making methods was even built, and maintained for over a decade (called “The ‘PIMS’ Database[1]”).

How to get best possible sales? Use appropriate marketing!

Sadly, many executives who are responsible for Sales, have built careers on – and only know – systems, routines and operational ways to get great sales… and, because there are many great sales people in most industries, these commonly shared methods undermine competitive advantage.

Generating extraordinary sales, record-breaking sales, and genuinely better sales, elude many., because what they THINK is Strategic Marketing is actually Tactical/Operational Marketing.

Strategic Marketing is the SUSTAINABLE path to profitable sales and growth, mostly evolving from planned and well-managed application of marketing science, marketing models and methods, complex and skilled permutations of advanced techniques, and marketing devices under-educated marketing consultants only wish they knew and understood.

Yes, there ARE exceptions: Dynamically Continuous Innovations and Discontinuous Innovations (which have recently been trendily described as “Disruptive Innovation”) but these will be short-lived without strategic marketing disciplines.

The Conundrum of Marketing

The Conundrum of Marketing is that few understand the breadth and depth of the discipline; the advent of the digital era has allowed  convincing sales people to twist and distort the meaning to their own advantage.

Lack of advanced understanding comes with lack of education. ANYONE who calls himself, or herself, a Marketing Professional, who hasn’t completed at least one full [dedicated] degree in Marketing, is far short of properly trained in strategic marketing.

However, they may be brilliant in Operational Marketing… so others, who are also ignorant of the extensive nature of the discipline, believe Operational Marketers to be competent and qualified in strategic marketing.

Operational Marketers, naïve of the knowledge that can be honed from strategic marketing training, themselves believe they have mastered their art.

They are like witch doctors completely unaware of modern medicine: They know what to do in a singular, unchanged environment, but are lost in new or unfamiliar circumstances.

This is how big, omni-potent businesses go bust.

In 1986, Fortune Magazine named Digital founder Ken Olsen, “America’s most successful entrepreneur”. He said there was ‘no reason for any individual to have a computer in his home’. OPERATIONAL thinking, not STRATEGIC.

In my earliest days I was guilty, myself, of a limited operational perspective and I have witnessed peers, friends, superiors, students, competitors, the most well-meaning and the most arrogant, ALL suffer the inevitable ignominy (and pain) of defeat, that could have been wholly and completed avoided if they’d only been empowered with strategic marketing skills.

Businesses don’t fail! Products don’t fail. It is PEOPLE who fail!

The evidence is around us … 90% of new products should NOT fail. 67% of businesses should not close within 10 years! Established businesses SHOULD be immortal.

In Australia alone, 44 business close down every day! A staggering 42% of business closed down 2003-7… BEFORE the GFC!

Product launches that fail. Businesses that close their doors. Corporations that lose millions. These are ALL symptoms of weak or missing Strategic Marketing.

To serve the global community and those who are willing to listen, I have penned a small book, to introduce those with an interest in sales growth, to the differences between operational and strategic Marketing.

IF you’re keen, you can download it from j.mp/ALLmktg or drop me a line & I’ll send you a copy.

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[1] Profit Impact of Marketing Strategies