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…

 

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?

 

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!

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

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.

Darrell Lea shouldn’t have gone broke, and COULD be saved… but is would take an open-minded and clear-thinking CEO, fully supported by shareholders, to save it.

DL, like so many other medium and large companies, suffers the two most eroding factors in business decline: Operational focus (not strategic) and corporate arrogance (generated by leadership of senior executives).

DL needed, and could still be saved by, blue ocean strategies identifiable by the most rudimentary market research, a disciplined adoption of advanced product portfolio management, a re-alignment of customer experience management, and an investment in corporate marketing governance, but mostly by skilled and prudent leadership.

The TRUTH is businesses don’t fail, management does. No difference here to Ansett, FAI, or any other noteworthy failure.

The following is a summary of my presentation at the 2012 FMCG Summit on Longevity, held at MGSM.

Every company must follow its mandate/mission/vision and derived corporate objectives: That’s the Board of Management’s job!

So why is everyone complaining that WW & Coles are making it hard? It’s their job to maximize profit…. and ours to help them! If we happen to make mega bucks in the process – good on us! If we get deleted in the process, we should only blame ourselves.

When marketing science reigned supreme, a very accurate and detailed segmentation study, including positioning map and competition analysis, was a yearly investment, but in the past decade, as pressure has been put on improving WW & Coles profits, operational managers have sacrificed long term strategic foresight, and stripped themselves of their most powerful ally – market segmentation knowledge.

[A show of hands at the Summit showed only 1 attendee had commission a new segmentation study in the past three years – now wonder FMCG marketers are losing bargaining power!]

Now that Woolworths, and Coles have the power of loyalty card data… data that is fast, statistically reliable, accurate, and consistent, FMCG marketers are going to be stripped of their knowledge assets, and buyers will become category experts like never before.

Buyers can now rebuild a category from scratch… deleting big brands, ranging new innovations, with assurance and confidence they have never had before… because they really KNOW their customers.

The only tool that FMCG markets have to battle is better, albeit different research.

Now, more than ever, we must see Coles and Woolworths as trade partners sharing common needs… satisfaction of the customer. FMCGers must discard the red ocean strategies of undermining competitors and fervently pursue blue ocean strategies that can be exposed by trend analysis from consistent, quality market segmentation studies conducted periodically and analyzed meticulously.

It is up to us to demonstrate to buyers that there is real and sustainable commercial advantage in ranging our products. The two basic tools are marketing effort, and positioning strategy, that together build the asset of brand equity and the outcome of significant market share.

Cynics will say this is easier said than done, but, with C-level support, it is almost easier done that said, IF we remember that the rules, laws, models and processes of professional marketing work (if applied properly) and FMCG markets simply cannot afford to shortcut on any.

 

Do this and we it is inevitable that you WILL follow your company’s mandate/mission/vision and derived corporate objectives in collusion with Woolworths and Coles instead of in spite of Woolworths and Coles.