counterintuitive marketing: surviving death wish research march 18, 2002 this report is solely for...
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Counterintuitive Marketing: Surviving Death Wish Research
March 18, 2002This report is solely for the use of client personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client organization without prior written approval from Copernicus: The Marketing Investment Strategy Group, Inc. Copyright 2001 COPERNICUS, all rights reserved
PMRGprepared for:
2
These are tough times for American businesses. Consumer confidence has dropped like a stone; revenues are down; profits down even more;
investments in R&D and marketing have been
cut to the bone.
3
There is a major role for marketing in this period of adversity. Not marketing
as it is often practiced today, but state-of-the-science marketing.
4
“Marketing is the discipline concerned with solving people’s problems with products and services profitably.”
Procter & Gamble
“Marketing is the discipline concerned with solving people’s problems with products and services profitably.”
Procter & Gamble
5
“The difference between selling and marketing is that selling is getting rid of what you have, while marketing is having what people want.”
Ted Levitt
“The difference between selling and marketing is that selling is getting rid of what you have, while marketing is having what people want.”
Ted Levitt
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“The business enterprise has two—and only two—basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs.”
Peter Drucker
“The business enterprise has two—and only two—basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs.”
Peter Drucker
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“The purpose of a business is to get and keep a customer. The purpose of marketing is to get and keep customers for businesses. The purpose of a business and the purpose of marketing are one and the same.”
Kevin Clancy
“The purpose of a business is to get and keep a customer. The purpose of marketing is to get and keep customers for businesses. The purpose of a business and the purpose of marketing are one and the same.”
Kevin Clancy
8
“Marketing is the engine that drives business.”
Phil Kotler
“Marketing is the engine that drives business.”
Phil Kotler
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Marketing may be the engine which drives business, but in most companies the engine is broken: most marketing programs don’t work as well as they could or should.
Marketing may be the engine which drives business, but in most companies the engine is broken: most marketing programs don’t work as well as they could or should.
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How Well Is Marketing Working
in 2002?
14%Above
average
2%Well below
average
68%Average marketing
program
The Zone ofExceptional Marketing
The Zone ofConventional Marketing
14%Below
average
2%Well above
average
The Marketing Performance Bell Curve
Marketing Performance
Embarrassing
Troubling Disappointing PleasingAmazin
g
Market Share Growth
Precipitous
Decline
Significant Decline
Modest Decline
Significant Increase
Dramatic
Increase
New Product Success Rate
0% 5% 10% 25% 40%+
Advertising ROI
Negative 0% 1-4% 5-10% 20%
Consumer and Trade Promotion Disaster
Very Unprofitabl
e
Marginally Unprofitable Profitable
Very Profita
ble
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14%Above
average
2%Well below
average
68%Average marketing
program
The Zone ofExceptional Marketing
The Zone ofConventional Marketing
14%Below
average
2%Well above
average
The Marketing Performance Bell Curve
Marketing Performance
Embarrassing
Troubling Disappointing PleasingAmazin
g
Customer Satisfaction 0-59% 60-69% 70-79% 80-89% 90-95%
Customer Retention/Loyalty
0-44% 45-59% 60-74% 75-89% 90-94%
Customer Acquisition Programs
Disturbing Losses
Significant Losses
Marginal Losses
Break EvenProfita
ble
Brand Equity ($ Value) Disturbin
g LossesDramatic
LossesModest Decline
Stable to Improving
Dramatic
Improve-ment
How Well Is Marketing Working in 2002?
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AirlinesAthletic ShoesAuto Insurance
BanksBeers
BookstoresBottled water
Catalog clothingCigarettes
ColasCold Cereals
CookiesCosmetics
Credit CardsDepartment Stores
Fast Food Restaurants
Gas StationsHaircare Products
Headache RemediesHealth & Fitness Clubs
Home Entertainment EquipmentHotels
Household CleansersInternet Search Engines
Internet Service ProvidersJewelry
Laundry DetergentsLiquor
Long-Distance Telephone Services
Luxury American CarsLuxury Foreign Cars
Major Household Appliances
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Mid-priced American CarsMid-priced Foreign Cars
Motor OilsNewspapers
Office Supply StoresPersonal ComputersPet Supply StoresPolitical Parties
Potato ChipsRental Cars
SoapsSpaghetti Sauces
ToothpastesTV Networks
Weight Loss ProgramsWireless or Cellular Telephone
Services
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The study revealed that out of 48 product categories, Brand Equity
scores are:
Decreasing in 39 Stable in 5 Improving in only 4
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The study also showed that in two-thirds of all product categories, a
low price is becoming more important than brand driven
product features, attributes, and benefits.
17
The study led us to conclude that far more brands are being
transformed into commodities than commodities are being transformed
into brands.
22
The certainty of being right plus the personal and professional power to ram it through the
organization.
23
Symptomology
Decisions based on intuition, not research No time to do it right, lots of time to do it
over The pursuit of short-term results, often in
30 days Emphasis on brand juice not brand
equity; visual identity, not strategy and substance
Little knowledge of real customer needs and problems
No clear targeting and positioning Entertaining rather than informative
advertising Weak implementation, poor follow
through
Decisions based on intuition, not research No time to do it right, lots of time to do it
over The pursuit of short-term results, often in
30 days Emphasis on brand juice not brand
equity; visual identity, not strategy and substance
Little knowledge of real customer needs and problems
No clear targeting and positioning Entertaining rather than informative
advertising Weak implementation, poor follow
through
24
Feeling under the gun, IT marketers typically ask researchers to run a few
focus groups, make 100 telephone calls to test a concept, or undertake one of the many other conventional
techniques we call….
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(a.k.a., Misinformation)
Death Wish Research
Focus group fixation Hypnotized respondents Customer satisfaction studies by mail The three-minute segmentation study New product concept testing by
telephone Strange, non-representative samples Web-based surveys with ½ of 1%
response rates High powered analysis of non-sensical
data
Focus group fixation Hypnotized respondents Customer satisfaction studies by mail The three-minute segmentation study New product concept testing by
telephone Strange, non-representative samples Web-based surveys with ½ of 1%
response rates High powered analysis of non-sensical
data
27
The Advertising Research Foundation recently found CEOs put less faith in marketing research than in most of their other sources of information.
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CEOs reported that research had been most disappointing in predicting new
product success and in measuring advertising’s true effectiveness.
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Research Jargon Bingo, Anyone?
R-squared Logit Regressio
n
Gap Analysis
Lisrel ROI
Revisit the
Numbers
Not Statisticall
y Significant
Interaction
Brand Juice Drilling Deep
Value Propositio
n
Brand Equity
Pareto Curve
Think Outside the Box
Pattern Recogniti
on
Marketing Metrics
Best Practice
Knowledge Based
Optimal Data Mining
Neural Network
Customer Relationsh
ip Manageme
nt
Leverage Ethnographic
Heavy Users
31
To rebuild confidence and the perceived value of marketing
research, we must acknowledge the reckless use of bad research and put
an end to it once and for all.
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It all starts with using the tools and technology available today to make the most profitable decision at each
stage of the marketing process.
33
“Strategy is about making choices. The essence of strategy is choosing to perform activities differently than rivals.”
Michael Porter
“Strategy is about making choices. The essence of strategy is choosing to perform activities differently than rivals.”
Michael Porter
35
“The most important strategy decisions are targeting and positioning. Once you nail these, everything else follows.”
Phil Kotler
“The most important strategy decisions are targeting and positioning. Once you nail these, everything else follows.”
Phil Kotler
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Undifferentiated Market
All Prospects
A Good Target
An Optimal Target
Automobiles $1000+ $325 $150 $99
Credit Cards $300+ $182 $88 $49
Packaged Goods $80+ $63 $29 $8
PCs $500+ $366 $155 $83
Private Banking $50,000+ $12,100 $6,300 $3,500
Software Services $1000+ $644 $357 $216
Utilities $800+ $417 $132 $75
Acquisition Costs for Different Targets
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Create Hundreds of
Ways to Segment
the Market
•Attitudes/Values•Buying Behavior•Motivations•Psychographics•Demographics•Sociographics•Lifestyles•Lifestage•Database Variables
Testagainst
rigorous, profit-related
criteria to identify
key market drivers
Put into taxonomi
c analysis
(e.g. neural
network, latent class,
proprietary
cluster)
Evaluate different solutions
using statistica
l, manageri
al, and financial criteria
Identify a
financially
optimal segment
a-tion and
target(s)
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“CategoryInvolvement”
MediaExposurePatterns
Databaseand
Third-Party
DemographicFactors
PsychographicFactors
Buyer Behavior
BuyerMotivations
Market Segments
…In fact, variables from each of these may be needed to develop segments
Variables
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16% 24%15%
19%15%
6%
20%
16%
21%17%
8%
24%
55%
26%
18%
% of Households
Share of Current
Spending
Share of Potential
Profitability ROI IndexROI Index
229229
3838
130130
3232
9494
Speedsters Represent 24% of the Population and Account for 55% of Potential Profitability
Speedsters
Soccer Moms
Car Buffs
Price Shoppers
Loyalists
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One, two, or three words, phrases or sentences about your brand that you want to
imprint in the heads of key stakeholders.
So clear, so succinct, and so powerful that once launched, it begins to move people
toward your new evolving brand.
Powerful positionings lead to powerful brands.
A Positioning Must Be:
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Apple iPodBMW
Burger KingCharmin Tissue
Coke Chevy Trucks
Colgate Total ToothpasteDisney
GEMobil Service Stations
Universal’s OrlandoVisa
Volvo
1000 songsExceptional performance
Have it your waySoftness
Authentic, real, originalTough, strong, durableTotal dental protection
Wholesome family entertainment
Improves the quality of lifeFast, friendly service
Thrills, excitement, escapeAccepted everywhere
Safety
44
In most companies, if products, services and brands are positioned at all, it appears to be in the minds of marketing managers
and not customers and prospects.
45
In categories as diverse as airlines, beer, copying machines, financial
services, wine and spirits, prescription drugs, and soft drinks … few buyers associate anything with the leading brands that we could begin to call
“positioning.”
47
Many researchers believe that the key to a great positioning begins by
asking people what is important.
48
….A soft drink makes you feel younger than you are?
….A prescription drug that helps you get and maintain an erection?
….An automobile impresses your neighbors when you drive it home?
How important is it to you that…
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“Motivating Power” of Different Benefits/Attributes
“Dream Detection”
Self-reported “desirability” in questionnaire
“Problem Detection”
Desirability rating versus satisfaction
“Preference Detection”
Relationship between
perceptions and preference
A Different Model of Consumer Motivations
50
Comparative
Advantage
High
Moderate
Low
Comparative
Disadvantage
Parity
Motivating Power
A Colossal Disaster
The
Failure
Zone
of
Normative
A Powerful Positioning
51
With the elements of marketing strategy in place, we devise a plan of
action and of attack that connects inputs with
desired outputs.
52
“An excellent strategy is a necessary but insufficient condition for success. It needs to be ‘captured’ in an innovative, realistic, and achievable marketing plan.”
Clancy and Krieg
“An excellent strategy is a necessary but insufficient condition for success. It needs to be ‘captured’ in an innovative, realistic, and achievable marketing plan.”
Clancy and Krieg
53
Today marketing plans at most major companies are developed without any
real knowledge of the relationship between marketing inputs and outputs.
54
Sales and/or profit objectives are set by top management without any real insight into whether they can be
achieved.
55
These objectives are only remotely related to the strategy. The tactical plans ( e.g., GRPs by month) are based on last
year’s failed plan and their relationship to the objectives is weak at best.
56
It’s no wonder that these plans, held together by scotch tape and prayers,
fail to achieve their objectives.
57
Innovative model-based marketing plans with empirical underpinnings
– thereby integrating objectives, strategy and tactics.
DTC modeling (a.k.a., simulated test marketing, marketing mix
modeling, promotional modeling) can then be employed to evaluate and improve plans before a real
world introduction.
A Different Approach to Marketing Planning
58
What is DTC Modeling? A set of equations which predict real world
output (including new and repeat Rxs) from marketing plan input (such as primetime network television target rating points per month)
These equations are grounded in marketing science, some of it published in academic journals and much of it fire-tested in real world applications.
The parameters of the equations are estimated using proprietary research appropriate to the state of development of the marketing program.
59
Pharmacy Visit
Product Satisfaction/EffectivenessRepeat and Share of RequirementsNormative TRx/NRx dataMarketing and Manufacturing Costs
DTC Campaign:Media Types EmployedTRPs by MonthMedia ImpactShare of VoiceAdvertising Impact by MediaPublic RelationsWebsiteWord of Mouth
Product Concept:Benefits, Side Effects, DeliveryAd PersuasionPrice:Patient Co-pay Amount
Product Availability
Sufferer Needs:Category InvolvementSufferer Compliance
Total Sales/Profits
Incremental Sales/Profits (due to DTC Campaign)
TRx
NRx Filled
Physician Compliance
NRx Written(see Physician submodel)
Brand or Campaign Awareness
Sufferer Universe
Forecast conducted with/without DTC Campaign
Physician Contact
MCO Formulary AcceptanceGeneric Availability
DTC Consumer Model
60
Incremental NRx’s Written
(due to DTC Campaign)
Professional Campaign:Media Weight & ScheduleShare of VoiceAdvertising ImpactMedia Impact
Medical Sources: Ref. books, Journal articles, Colleague Recommendations
Detailing
DTC Campaign:Media Weight & ScheduleShare of VoiceAdvertising ImpactMedia Impact
Product Concept:Benefits, Side Effects, DeliveryAd Persuasion
Price:Patient Co-pay Amount Sampling
MCO Formulary AcceptanceGeneric Availability
Analysis conducted with/without DTC Campaign
Physician Innovativeness
Product Availability
Brand or Campaign Awareness
Physician Universe
NRx’s Written
Patient Inquiries/Requests
DTC Physician Model
62
“All too often a marketing strategy and plan, however well conceived, is not implemented carefully.”
Clancy and Krieg
“All too often a marketing strategy and plan, however well conceived, is not implemented carefully.”
Clancy and Krieg
65
Guided Implementation
Audit implementation plan Assess conformity to strategy and plans
Assist the project team in realigning work processes Organizational design; Roles and Responsibilities
Ensure organizational alignment with the new strategy At the Business Unit as well as Corporate levels
Monitor execution to keep the program on strategy Metrics and Milestones
66
“A good monitoring system not only tells you how you are doing, but also what to do.”
Clancy and Krieg
“A good monitoring system not only tells you how you are doing, but also what to do.”
Clancy and Krieg
67
Monitor performance to make on-going adjustments and improvements to the plan—that model of the marketing mix will help.
68
DTC Campaign PenetrationDTC Campaign Penetration
Year-End Forecast Based on Three Data Points
Year-End Forecast Based on Three Data Points
Weeks after LaunchWeeks after Launch
0%0%
10%10%
20%20%
30%30%
40%40%
50%50%
1313 2626 3939 5252
Objective
Forecast
Actual
69
Bottom-line:
Balance intuition with counterintuitive findings grounded
in unimpeachable data and analysis.
70
“Destiny is not a matter of chance, it is a matter of choice; it is not a thing to be waited for, but a thing to be achieved.”