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?

 

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

I just went to any amazing road show for Marketo.

God knows how much they spent to entertain over 1000 marketing professionals with breakfast lunch morning teas, drinks, in the centre of Sydney, at The Westin Sydney, a five-star hotel sporting one of the CBD’s biggest convention rooms, with an array of quality speakers, full light & sound, screen and seating, promotional gifts, decor and print matter… and all the promotional activity to fill the room…

They flew Phil Fernandez, their Chairman and CEO, over from the states… and their VP of Product Management as another USA presenter from their team…

Their key staff were there, up to and including their Marketing Director, all kitted out in promotional attire.

It was smick. Chic. Classy. Impressive… and Marketo deserve to get some sales from it.

But you don’t NEED deep pockets when you get Positioning right

The problem is they missed the mark, simply because they don’t appear to understand the Definition of Marketing. They use Marketing as a synonym for PROMOTION.

As a colleague of mine put it, “They perceive only 1P in anyone’s marketing mix”.

Marketo appears to be a powerful digital, marketing communications tool. Optus and Flight Centre promotions department use it successfully.

But, because Marketing isn’t just about generating leads, and professionals know its as much the management of pricing, of distribution, new product development, market research and analysis, product management and brand management, management of processes and people and positioning… packaging, planning, forecasting, industry analysis, competition analysis, environmental analysis, economic analysis, compliance with legal and social cultural norms and expectations, keeping up with technology, managing change, strategic planning and coordination with corporate mission vision and purpose, juggling budgets and answering to multiple stakeholders (internal & external) AND promotions management (analogue AND online) … Marketo has created for itself ambiguous positioning and vague market reputation.

Within the Promotional Mix (the 1 P that Marketo performs in) marketers are balancing inputs such as advertising, public relations, sales promotions and personal selling, to not only generate leads, but satisfy and respond to all of the Marketing Mix, above… and if Marketo could just grasp its own true value, deliver positioning that says “Online, digital promotions management software”, then Marketo would be targeting PRIME target audience prospects, better communicating its own USP (unique selling proposition) and revealing a valuable PBM (prime buying motive) that would generate better sales for itself and better information dispersion to the marketing industry.

Anyone wanting a quick treatment of Definition of Marketing should visit http://bit.ly/MktgDef

For a deeper and strategically applicable treatment download my [free] e-book, The Four Faces of Marketing from http://j.mp/ALLmktg.

Marketing effort vs Market Positioning

The brawn is big budget. The brains is positioning.

  1. The word “Marketing” is used as a synonym for selling, promotion, or marketing communications.
  2. Marketing and Sales are at odds… see each other as different departments or business units, exhibit power tussles and can be uncollaborative. Sales people are left to do all the selling.
  3. There s no Marketing qualified executive on the Board of Directors
  4. The CMO or head Marketing executive does NOT possess an MBA or actual Marketing degree.
  5. Marketing Planning is NOT a priority and routine in your organisation
  6. Client satisfaction levels are below 85%
  7. There is high animosity between the employees and management of the Company.
  8. Your brand actually disturbs a proportion of your market rather than attracts it.
  9. Trade partners and stakeholder hold you in low regard.
  10. Market share and/or profitability are falling or steady.

If any of these symptoms exist in YOUR Company, you AT LEAST should read and consider, “The Four Faces of Marketing”, free at … http://j.mp/ALLmktg

According to Wikipedia, the free encyclopaedia

Milton Friedman takes a shareholder approach to social responsibility. This approach views shareholders as the economic engine of the organization and the only group to which the firm must be socially responsible. As such, the goal of the firm is to maximize profits and return a portion of those profits to shareholders as a reward for the risk they took in investing in the firm. He advocates that the shareholders can then decide for themselves what social initiatives to take part in rather than having their appointed executive, whom they appointed for business reasons, decide for them.

Friedman argued that a company should have no “social responsibility” to the public or society because its only concern is to increase profits for itself and for its shareholders and that the shareholders in their private capacity are the ones with the social responsibility. He wrote about this concept in his book Capitalism and Freedom. In it he states that when companies concern themselves with the community rather than focusing on profits, it leads to totalitarianism.

In the book, Friedman writes: “There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”

The truth is that CSR-free businesses strive towards highest possible ROSF (return of shareholders’ funds). To do this they MUST focus on operational issues, ignore the implications and incidental costs of short-term returns over long terms position, and IF EMPOWERED, create win/lose relationships with trade partners (and even customers).

Friedman ignores two keys factors of the 8 P’s of Marketing – PEOPLE & POLITICS – the People who possess operational skills, don’t ‘get’ (or even understand) strategy. The politics of a Board of Management team that exercises OPERATIONAL strengths cannot embrace (or even grasp) STRATEGIC concepts, ideas, and approaches.

So Coles & WW have now commenced on their paths to self-destruction… two giants that DESERVE immortality, undermining their future. One is like a care with great power delivery to the rear wheels; just missing one of its front wheels… steering isn’t very good. The other is missing a rear wheel, it can only stay stable turning in a circular fashion on itself, in every widening and less efficient circles.

(If you doubt this at all, talk to Geoff Kennet, try and find a mission statement for Westfarmers or Coles, ask WW why they rejected a promotion to generate $400M p.a. in EBIT 8 years ago, because they were focused on ‘making’ Everyday rewards work, but now hang their hopes on squeezing more from suppliers, while taking more shelf space for private labels – the polices used by their abnormally high English executive team, who are applying the OPERATIONAL methods that have now damaged Sainsbury & Tesco.)

Both are building businesses for Aldi, and now Lidi… in the false race to short term ROSF while damning long term ROSF permanently. (See “Are WW & Coles sly Agents of Aldi”).

Mind you FMCG companies fell into the Corporate Arrogance trap decades ago (some are still there) and, had THEY had strategic insight and nous, they’d have control of the situation now, but alas… short term “Friedman” thinking undermined THEIR future, as well!

But CSR (Corporate Social Responsibility), or the lack of it, is NOT the issue, but only a symptom.

The REAL issue is strategic thinking vs operational thinking…. Strategic Management as opposed to operational Management… Panning for winning the war, not raining to win a single fight in a stand-alone battle.

Adopting the Hierarchies of Marketing, and embracing the need to create and maintain balance of power between OPERATIONAL and STRATEGIC thinking – mindful of the shareholder vs, stakeholder debate – is the reality that escaped Milton Friedman.

[Readers are invited to download my free e-book – “The Four Faces of Marketing – The Missing Link Between Marketing & Management” at 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