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 Objective of the following is to empower business leaders to achieve breakthrough, profitable sale growth: Here goes…

Understand What “Marketing” is

The first thing a CEO MUST do is recognize the definition of the word, “Marketing”… Believing that “Marketing” is simply the “1 ‘P’”, Marketing Communications, or “P=Promotions” … maintaining a perception that “Marketing “ is simply advertising, promotion, publicity and tricks , fluff and ‘smoke and mirrors’ or ‘sales support’, just locks CEO’s into a world of pain.

A CEO MUST understand that “Marketing” is actually the complete function of “managing exchange”… combining disciplines that include:

  • Quantitative methods
  • Market analysis
  • Consumer and buyer behaviour
  • Motivation leaning & either psychological skills
  • Pricing optimization and strategic management
  • Distribution and supply chain control & Management
  • Sales Process
  • People
  • Segmentation, Targeting & Positioning, AND
  • Internal Politics

Understand the Hierarchies of Marketing

It is sheer suicide to allow a person who has been in one industry, working there way “up” over the years, to rise to a Marketing Leadership role, without having secured tertiary or specialised STRATEGIC management education.

Why this has happened in Marketing, is abhorrent. But imagine, promoting a nurse to brain surgeon, because he or she worked in a hospital for 25 years?

Imagine, promoting a receptionist to Senior Tax Counsel because he or she worked for a tax account for 20 years?

Imagine, promoting the stewardess of a Qantas jet to head pilot, because she’s been flying for 30 years?

Its is MORE stupid to hand over strategic decisions for a business to someone who’s expertise has been buying print, organising photos, copy editing brochures, or drafting advertising schedules… sheer madness!!!

Understand Segmentation

A “market’ is nothing more that a corral of heterogeneous segments.

As soon as I hear naïve commentary that starts off with “All people want” or “Everyone wants…” I shudder!

As soon as you start treating your customers as cookie-cutter copies of each other, you have definitely, absolutely undermined your sales and profit opportunities.

As soon as you confuse your corporate identity from your branding, you are sunk!

McDonalds has limited itself by lacking strategic competence at this level. So has Telstra – big time! Woolworths (operational giants, strategic dwarfs) have no idea what they are missing. Even Apple, debatably excellent marketers, are cruising for a bruising… watch THEM decline if they don’t ‘get it’ soon!

Mars owns the global canned pet food market because is recognizes and rends to the existence of segments – you don’t maintain 85% market share for 30 years without a GOOD reason! But even the mighty can fall.

The Hurdle for Business

The issue is REAL Marketing has been defamed into an ancient art form by the self-interested opportunists of the operational strain… people without qualifications, who lack understanding and knowledge, always push people away who threaten their power.

Snake-oil sales people, with fast tongues and greedy motives will put down common sense to play on emotion and fear. Comedy and doubt, to feather their own nests and ANY cost.

The solution lays within the grasp of so any open minded CEO, COO of CMO

Leaders of organizations MUST be operational. They must know their businesses.

The opportunity costs is they cant have the strategic competence of those with different skill sets.

One of the best CMO’s I have met in years recently told ne he enters a meeting hoping he’ll be the least expert of all participants and that he’ll learn the most… but many business leaders perceive they know it all or should appear to know it all… with outcomes synonymous with the fable of the Emperor’s New Clothes.

There are a significant number of strategically skilled consultants and experts across the globe who do understand strategic marketing in its complete sense, and who can contribute to decision making strategically.

GREAT CEO’s recognise their own weaknesses as well as their strengths. Greater one’s act decisively and do something about it.

Want some more insight? Download my free e-book, THE FOUR FACES OF MARKETING, here… http://j.mp/ALLmktg

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

Too many marketing strategists believe their own BS! Pricing Strategy, Communications strategy, Online Strategy, branding strategy etc. isn’t genius… it is obvious, common sense that evolves out of the fact that perfect knowledge leads to perfect decisions.

I’ve had an extraordinary number of commercial successes in my career, record-breaking ones… NOT because I am one bit smarter, more intuitive, have more street cunning or am unusually lucky, but because I persevered long enough in learning my trade to be able to recognise the one, inalienable truth of business: If you genuinely know what the customer wants and can give it to them, they WILL buy!

The absolute secret, of all extraordinary business success, is knowing the customer.

Is it REALLY that simple?

Whether it is the individual or the segment – yes!

There are so many examples of this across the internet, in each of our careers, recorded, diagnosed, studied and reported by academics around the world, and demonstrable in every case study and high return annual report… so why do we complicate and confuse, cloud and cover this fact?

Think about it…

Pricing Strategy: In particular Value-Based pricing? Know the customer!

Communications strategy: In particular advertising & positioning? Know the customer!

Retailing: In particular store layout, ranging, staffing, location? Know the customer!

Manufacturing: Everything from branding, sizing, packaging, new product development, distribution strategy? Know the customer!

Why is the business community in denial?

When FMCG hummed a merry tune, the industry habitually committed to segmentation studies annually… but as operational executives with corporate political skills rose in a culture of corporate arrogance, costs were cut to carve out larger profits, ignorant to the fact they were really blunting competitive advantage and digesting brand equity.

In adequately training marketing personnel, briefing and sustaining market research of questionable quality, undermined the payback from segmentation studies and other market research.

Over the years, the team at my firm has written strategy for transport, banks, FMCG, commodities, utilities, government that has generated record-breaking results, unimagined sales growth, and extraordinary profits… why? Simply better understanding of the customer – EVERY time!

Qantas – sad but true

February 6, 2014

A peer sent me this email. The subject line sad “Sad but true”…

A man is alone in an airport lounge. A beautiful woman walks in and sits down at the table next to him.
He decides because she’s wearing a uniform, she’s probably an off-duty flight attendant.
So he decides to have a go at picking her up by identifying the airline she flies for, thereby impressing her greatly.
He leans across to her and says the British Airways motto, “To Fly. To Serve”?
The woman looks at him blankly.
He sat back and thinks up another line.
He leans forward again and delivers the Air France motto, “Winning the hearts of the world”?
Again she just stares at him with a slightly puzzled look on her face.
Undeterred, he tries again, this time saying the Malaysian Airlines motto, “Going beyond expectations”?
The woman looks at him sternly and says, “What the f*** do you want?”
“Aha!” he said, “Qantas!”.

The Qantas cynic might say, “THAT is why QANTAS is losing ground, bad staff is the anchor around management’s neck!”

In fact, bad Management creates bad staff. What drives some QANTAS staff to be so rude, and offensive? Why are so many like that?

People are psychologically ‘wired’ to want to do their jobs to the best of their ability. They WANT to be proud of what they do, how well they do it, and genuinely derive endorphin (physiological) gratification for doing so… beyond the intellectual reward of remuneration and benefits.

However, when frustrated by politics, ineffective or inadequate processes, insufficient support or resources the psychology turns to protecting their higher motives with coping mechanisms. Unable to grasp the nuances of why they are frustrated, they lash out negative, emotionally, irrationally, and the rest is exemplified above. The spread disharmony among peers, disenfranchise supports, do there jobs even worse. Is it satisfying? No! Is is spite against an employer they perceive is unsupportive? Perhaps. Can it be changed? Yes!

Decent training, decent support, decent supervision, decent employment mentoring, and QANTAS would be the best, most highly regarded airline in the world… with travellers thrilled to pay a premium!

Good Management would ensure good staff… staff who are empowered, motivated, inspired to impress, and ‘market’ the brand positively.

QANTAS has potential. Even under existing management, the diminishing brand decay is not yet reversible, but this cannot last long.

The madness is that major shareholders appear to be, ignorant of this incompetence in management and rewarding it!

Well, they say, “A fool and his money are soon parted”. What they don’t say is “The incompetent word-smiths at the top of funds management companies who do NOT have the know-how to make intelligent managerial appointments, are wasting away the superannuation of millions of people.”

Shame… not only for the punters who trust their superannuation managers to do a better job, but also for the icon we once proudly new to be QANTAS.

So many businesses could boom beyond all expectations…
… If ONLY they knew how much they don’t know, when it comes to ‘marketing’.

So many still think that “marketing” is “promotion”. Others perceive it as simply ‘selling’. Dangerous CEO’s think marketing is just ‘fluff’.

Companies that have leaders with this perception are ultimately doomed… proven infinitely, too often, by companies, businesses, brands and products that ‘fail’.
In fact, companies, businesses, brands and products do NOT fail, management does!

But try telling the naïve, the ignorant and the uninformed: They don’t know how, if they’d only opened their minds, the bulletproof armour that ‘true’ marketing provides.

The complexity of this problem is exacerbated by the fact that too few senior executives were exposed to advanced marketing study at tertiary level, and that TOO MANY were so badly taught by so many inept academics, that the power of marketing methods was never revealed, ad that many students at University were so focussed on finishing their full-time degree and getting a job that they too quickly forgot the advanced skills they were taught much sooner in their careers than when they were called upon to use these skills.

When you cross-pollinate the additional issue of operational knowledge vs. academic knowledge (industry specific knowledge vs. strategic theory) the issue of corporate (and personal) arrogance raises its ugly head.

A common example of this is strategy problems that could easily be solved by product typing.

Take, for example, the B2C model of product type.
If you are selling guttering, time-share, insurance, or any other unsought good, the ‘rules’ say awareness is key. Too many guttering, all time-share and struggling insurance businesses don’t even grasp this!

Then, those that do don’t understand segmentation must be bought to turn this knowledge into profitable strategy development. Then, those that can, don’t have the acumen to brief, commission, or recognise good marketing research in terms of a segmentation study… and THAT’S assuming their management will empower them with enough funding to acquire this knowledge.

Then the organisation may not have adequately skilled people to interpret the research, brief and control the creative development in marketing communications, exercise scientific management of media variables (weight, reach, timing, competitive response, etc.) or the management of channels, production, product portfolio, pricing, people, processes, positioning, etc.

What happens in almost every industry is the LEAST WORSE battle for major market share, the completely devoid of know-how battle for crumbs.

IF a company flukes or actually plans using advanced, integrated strategic marketing, they end up with ‘unnatural’ marketing share levels of 80% plus… long term!
Look at Coke, Mars, McDonalds, and P&G: Companies embracing marketing scientists & enjoying the benefits.

Look at Ansett, FAI, thousands of SME’s that collapse annually… victims of their own refusal to believe they need marketing science.

Imagine a world where businesses, NFP’s and government bodies actually were truly marketing led and managed… utopia!

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Begin your trip towards explosive growth in sales and profits, by starting at:
http://bit.ly/MktgDef

Frustration is viral

November 20, 2013

Frustration is a viral sentiment spreading throughout the global business community, “How do you find executive management who can truly achieve results, embrace cutting-edge methods and implement bold new ways to succeed?”

Business success comes not by natural intuition, through costly mistakes, charismatic diplomacy or knowing the ‘right’ people. (This attitude has, and continues to, put potentially immortal companies at risk and costs billions in avoidable commercial failures.)

Business success comes from wisdom-based talent layered upon experience and knowledge.

Many large international businesses need to experience change and renewal, particularly those with a number of market leading products, in established industries, major categories and competitive businesses.

They desperately NEED sustainable competitive advantage, which comes from innovation built upon solid strategic skills, genuine strategic innovation, blue-ocean growth initiatives spawned by the ability to identify key challenges effecting the organisation, and ability to develop and conceptualise strategies to improve competitiveness, steering those initiatives to improve overall business performance.

This calls for a leader with academic grounding, a breadth of experience that is rare among business individuals, and genuine successes in SME as well as middle sized and large companies. (The premise being no one person is ever responsible for success in large organisations, so ‘pure corporate’ executives from this background are more likely to behave been at the right place, at the right time, as often as they are a true performer.)

Boards must now scour the executive labour market for a new beast: Someone best suited is now an individual with success across a plethora of industries, who possesses demonstrable ability to understand new concepts quickly and act as an innovative thinker, with numerous experiences setting product strategy as well as the ability to implement.

Breakthrough performers must possess a passion for marketing strategy and instinctual understanding of buyer behaviour. They must be endowed with insight into the mechanics of marketing planning and business issues, and a wisdom that is unlikely to been seen in a young, corporate “climber”.

Self assured, mis-perceived as arrogant, or over-confident, ‘hero’ CEO’s dispel doubt when allowed to apply their craft and when results evolve.

All it takes is for an imaginative and dynamic Board or Shareholders to dare to try… the outcome being greater than the pain of resistance to change if they do.