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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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!

Product launches should never fail

Those who follow me, are aware that I ascertain new product launches should never fail.

Of course this follows from the fact that products don’t fail… businesses don’t fail… it is MANAGEMENT that fails to do its job properly, who truly fail.

How Do Executives Allow Product Launch Failures to Happen?

But is it their “fault”?

Perhaps modern-day executives are victims of the business education they have been fed, or the hype delivered by self-promoted NPD ‘experts’ who push flawed theory upon susceptible executives.

Models that are popular these days include the new product development wheel (which I admit to having taught, in the past, at postgraduate level myself) and the Stage Gate model (the NPD wheel re-packaged to seduce operational marketing folk with summarial simplicity)… BOTH limited and incomplete as management tools .

Given the limited delivery of academic acumen, it follows when Product Development teams are employed according to their knowledge of such tools, when business teams meet, committees are formed, and decisions are made they are made on the premise that these models are valid; its no wonder that product launches end up being risky, or unsuccessful.

Its kind of like a meeting of the the flat-earth society…. every decision that flows is built upon belief in a model that is simply flawed… so outcomes must be equally as flawed.

Methodology that starts with “idea generation” as Step One…. is dooming you to an 80% failure rate.

  • Idea Generation must FOLLOW discovery of market needs, wants, desires and aspirations.
  • Idea Generation must Be founded on Purpose, Mission and Vision.
  • Idea generation must contextual to the resources available to the organisation.
  • Idea Generation must to FOLLOW discovery of market needs, wants, desires and aspirations.

“That stifles creativity and innovation” cry the masses of self-proclaimed innovation & ideas experts (some of who are clever guys).

So might it be, but there ARE better ways paths to new product development for commercial success than the two mentioned above.

Anyone, globally, should bookmark & use http://www.prelaunchchecker.com to ‘test’ if your product launch idea has merit…

For folks in South East Asia, click this link to find out about my 2-day Product Development workshop this June in Kuala Lumpur, Malaysia. You can find out more by visiting, http://www.yf-asia.com/product-development-for-bullet-proof-product-launch/

Some of my followers might recall that I lectured in Marketing Planning at UTS Graduate School of Business between 2003 and 2009.

Others might remember I have written Marketing Plans for national and international companies, many FMCG,  pharmaceutical and consumer durables, a plethora of other big, small & medium companies, both B2B and B2C.

I may have mentioned that I routinely travel to Asia to deliver commercial workshops on Marketing Planning to executives of large national and international companies.

Consequently, I have spent some time and effort to develop an approach to Marketing Planning that takes:

  1. the profit generating tools from academic Marketing Planning, and
  2. the commercial implementation and reality-checked truths of Marketing Planning in the business world,

… and merged and coordinated both, to put together a Marketing Planning workshop designed to help professional marketing and strategic planning executives write break-though, winning marketing plans.

I’m delivering this  richly empowering “how to” this coming February 17 and 18, in Sydney, so I’ve attached a link to a page where you can get a brochure and more info, and I’d be thrilled if you, others you think might benefit, or professional colleagues who could do with some finesse in Marketing Planning, could attend.

I trust that you will give this some serious thought and, if its not for you, pass it on to someone who you think could use the knowledge.

You’ll be able to download the brochure, find information and booking options at..
http://j.mp/KOmktgPlans

And please feel free to comment with your thoughts on the content, or any questions.

I wrote this book (see below) for different folks:

    • Business Leaders wanting to build an amazingly resilient business
    • Marketing Professionals
    • SEO Professionals
    • Management professionals
    • Wikipedia – who maintain a completely wrong definition of Marketing on their site but refuse to change it
    • People who think Wikipedia’s definition of Marketing is right

Download a FREE copy of my latest book – The Four Faces of Marketing http://bookboon.com/en/the-four-faces-of-marketing-ebook

Ideally, of all industries, TV SHOULD be one that embraces ‘marketing’ with a passion… not only to best understand their clients, but it SHOULD be their business to understand the element of PROMOTION, which they are key to supplying,12.5% to 25 % of the marketing mix, and, in B2C marketing, sometimes over 25% of total expenditure.

However, TV management has been systematically destroying itself by overtly breaching every possible concept within the arsenal of strategic marketing managers’ armaments.

Is it no wonder that Channel Ten (sometimes called the Simpsons repeat channel) can hardly raise a rating?

Is any EDUCATED business strategist surprised that Chanel Nine has turned, in panic, to mass retrenchments?

Is there damning evidence that ABC executives are actually surprised that ABC is finding itself higher placed in ratings than ever before?

What free to air TV management in Australia has done wrong is ample content for a three year full time marketing course – on “How not the embrace the knowledge and methods of proven strategic marketing management”.

This could NOT have come at a worse time for marketers, particularly FMCG marketers, who desperately need a spearhead promotional medium that can reach big grabs of population awareness in a single investment decision.

In the old days, when TV was content first and cost-cutting last, when imagination and creativity led content decisions instead of revenue grabs, “me-too-ism” and short-term snatchers of high profit, HUT (homes using Television) was at 98% and high ratings were challenging high 40’s.

Even the highest ratings now rarely enter the 30’s.

“Oh, it not TV executives” is the cry, “Its the Internet”. BULL! If TV executive shad embraced 1% of strategic marketing expertise they would have been able to undermine the Internet becoming a medium of choice for leisure time, and significantly reduce households from developing new habits, and from web sites seducing a reluctantly disenfranchised population. Even now, they could turn this enemy into an ally, if they gave countenance to marketing strategy.

What on earth justified undermining the cultural norm of Australians joining together for their 8:30pm Sunday movie? Who actually believes that relying on one quality content show will satisfy a remote-loving viewer for a week.

What purpose did de-regulation serve but the permit such offensive and disruptive proportions of advertising that people reached for their i-phones or lap tops for respite? What self-deceptive denial allowed TV management to allow this terminal policy to perpetuate?
Anyone with formal marketing training can easily see senior management of free to air TV has no understanding of consumer behaviour, rudimentary life-cycle theory, the Boston Matrix, or product portfolio management, of segmentation, of brand management, of targeting and positioning, of modified vs straight re-buy buying behaviour, of new product development, of trending, and certainly no idea of the concept of blue-ocean strategy.

So fatally and fanatically arrogant that they ‘know better’, the free to air TV industry will most likely be regarded in history as laughable as Ken Olson, president, chairman & founder-Digital Equipment Corp., 1977, who said… “There is no reason anyone would want a computer in their home”.

In theory, of course, FTA TV is saveable. But, in practice, it would take a ferociously focused and determined Board of Management, with the support of shareholders, cooperation of middle management and budget to match, to turn things around at this late stage.

Roger Corbett, who was CEO of Woolworths on its rise to co-domination of Australian retailing, warned that corporate arrogance was the most dangerous threat to Woolworths’ future.
Could he be right?
In March, 2009, post GFC, American business analysts came to the conclusion… “Today, we face corporate arrogance that is almost transcendent and vastly more damaging than any of organized labour’s excesses”.
All to frequently, enraged experts, frustrated by simply ‘bad calls’ of businesses that have suffered by not following great advice, vent blame on…. “arrogant executives who use corporate leverage to implement an “our way or the highway” mentality”.
Is Woolworths in danger? Many thought Ansett would last forever, that FAI was rock-solid, that One.Tel, supported by a marriage of Murdoch and Packer, must be invulnerable. Even Qantas, also accused of outrageous corporate arrogance, but thought immortal, teeters on becoming the Asian Kangaroo.
Having heard Roger Corbett speak, I am convinced where there is smoke, there is fire, and while Woolworths may see movement into hotels and poker machines as a sure bet, I have too often observed profitable companies disappear into the mire of management by conceit that gives credence to the old adage “pride cometh before a fall”.