Marketing Myths that Are Killing Business
The Cure for Death Wish Marketing
From the book written by Kevin Clancy & Robert Shulman
First published in 1994 but still relevant … classic, timeless … this book addresses 172 myths among various sales & marketing subject areas: Business Performance, Marketing Planning, Marketing Department Organizations, Marketing Decision Making, Marketing Research, Marketing Climate, New Products, Targeting, Positioning, Advertising, Media Planning & Scheduling, Promotion, Public Relations, Pricing, Sales Force Management, Direct Marketing, Retailing, Customer Service, Test Marketing, and Measuring Marketing Performance.
The authors contend, and I would agree, that marketing is what drives business and without it, the business would not exist. It keeps the financial managers, accounting staff … and everyone else in the organization afloat, as they say.
They also claim that most CEOs and senior managers don’t know much about marketing, and many marketing managers are not that well-trained or educated at what they do, which leads to questionable programs with questionable effects and an uncertain relationship with profitability.
Here is a selection of myths worth considering. I’ve aimed to capture the essence of what they said while making the discussion of each brief.
Myth: Most Marketing Programs Work
Does advertising really pay off? Do discount promotions help or hurt? Do senior executives really know which programs are ‘profitable’ beyond an increase in sales?
When they say the programs don’t “work” they are saying the programs rarely lead to ‘profitable’ sales. And, they say many if not most executives don’t know how much the programs bring in ‘profitable’ sales. They refer to an advertising study that showed in about half the time, increased advertising spending also increase sales, but only about half of those sales brought an ROI that justified the spending. That is, in only about 25% of the time, is the increased advertising spending actually profitable, and this includes changes in the copy, not just more of the same. And so, more marketers turned to Consumer and Trade Promotions (discounting) or Sports and Events Marketing Promotions (for public relations). This turned out to create losses rather than profits, even with a temporary boost in sales. It also weakened the brand image and ended up lower profits over both the short and long run.
Myth: Short-term marketing results are more important than long-term results. Nothing more to add here than that it’s a myth … I’m assuming it’s common knowledge now.
Myth: Faster is better in planning. This typically means cutting research and making decisions solely on one’s personal judgment.
Myth: Marketing is known to be the discipline concerned with solving people’s problems, at a profit, and most companies attempt to uncover those problems. Setting aside that many of the research tools result in questionable validity (not that most companies even bother to use the tools), too many executives are known to merely look at what’s coming out of it’s research lab, at what their competition is selling, and listen to what their salespeople say will sell and hope for the best.
Myth: Small businesses don’t need to follow a disciplined approach to understanding their markets. On the contrary, they need to continually assess the environment, narrow and understand their target market, find their proper positioning, do an analysis of the competition, and develop products with effective pricing and merchandising. They need to continuously monitor their customers to find out if they are happy and satisfied.
Myth: Seeing what your competition is doing is a good way to spot marketing opportunities. This assumes your competitors know what they are doing, especially when they are big. The key is to know how successful they are as a result of what they are doing.
Myth: “Partnership” marketing is a surefire way to increase profitability. Would you say that getting married is a surefire way to find happiness? It’s just not true. Similarly as in many marriages, one business partner can abuse the other. On the other hand, there are situations where partnership marketing works: when the partners are approximately equal in size and strength, when both have a culture that promote cooperation, when the balance of power is roughly equal, and both partners see the partnership as a strategic collaboration with the commitment of assets and management resources, aimed at enhancing both partner’s competitive position.
Myth: “Brand equity” should be part of every strategic plan. Without contradictory evidence, most consumers tend to assume the well-known brand is the better quality product or service. But the term ‘brand equity’ has no consistent meaning, no common meaning on which everyone agrees, and it will likely end up removed from the marketers vocabulary. In general, the term has come to mean that people have positive feelings about the product or service, the authors say.
Myth: The terms High Involvement and Low Involvement are useful for product or service categories. High involvement means the consumer spends a lot of time and attention to making the purchases, low involvement means little thought or attention to the purchase. The terms may be useful when you understand that a noticeable number of consumers will devote a lot of time and attention to what are called ‘low involvement’ products. And, a not insignificant number of people will spend a lot less time and attention to what are called ‘high involvement’ products (e.g., automobiles) than you might expect. Studies of different products have shown a good percentage of people of both ends of the involvement spectrum per product. Some people will take a good deal of time deciding on a brand of paper towel, and some people will spend much less time the you might expect to buy a car. So, the terms are useful to some degree only if you understand the variants, so you can know who it is you are trying to reach.
Myth: If you succeed in getting a product shelf space, it will generate a good return on sales. In truth, getting distribution does not equal achieving success in sales, let alone a good return on sales. It’s a waste of time and money to rely strictly on shelf space and hoping that product packaging will create sales.
Myth: When invigorating a brand, it helps to consider where the product or service is in its ‘life cycle.” Since Product Life Cycle is merely a generalized planning concept, ‘standardized’ strategy and tactics based on life cycle stage (e.g., heaving advertising and penetration, premium or skimming pricing) don’t fit every product or product category. Some long-time products that might be considered near the end of the so-called ‘life cycle’ have been re-invigorated through clever ad campaigns, which brought back tremendous sales.
Myth: The faster technology changes, the more valuable the brand name. The opposite appears to be true for technology-based products … that the faster technology changes, the more consumers value the new products more than the brand name. Compare this to the low technology brands like chewing gum, toothpaste, canned fruit, soap, razors, soups.
Myth: Market share determines profitability, and so companies should always aim to achieve market leadership. The thinking is that economies of scale will return a good ROI. So, some company leaders will focus on buying their way to market leadership or promote and discount their way to ‘dominance’ in the market. Leadership does bring some positive effect, but there is not a direct correlation to how much and the PIMS study that proposed this correlation doesn’t have an answer as to why. Market leadership with increased profitability could from economies of scale, or risk aversion by customers, or market power, or product quality. It could be from market differentiation, management expertise, stupidity by your competitors, or luck. Or, the converse could be true … that is, the more profitable companies can afford to make the investment to build market share.
Myth: Marketing plans should be based on the idea that you continuously improve each year. Alternatively, the company should start each year’s planning with a clean slate, where you assume you know nothing about the environment and the consumer. This leads you to take a current and fresh view of both, so you avoid getting into a rut.
Myth: Successful marketing comes from being “creative,” or “different,” or “exciting,” or “sexy,” or all four … where style is more important than substance, packaging more important than content. Instead, success comes from intelligence along with seasoned judgment … the two together, not separately … with profitability being a key factor in the decision.
Myth: A reasonable way to set the Marketing budget is to adjust last year’s budget for inflation. This is true but only if the reasons for last year’s budget made sense.
Myth: Small businesses can’t afford to research and plan strategy the way big businesses can. Well maybe they can’t afford the same type of studies the big ones can afford, but they can afford modest yet still scientific and reliable. Every business should do marketing research, no matter the business size.
Myth: Companies should spend a fixed amount of their budget each year on marketing research. In truth, no fixed percentage for marketing research should exist. Instead, it should depend on what you need to achieve, e.g., positioning research, targeting research, pricing research … whatever will help the business thrive and sustain profits.
Myth: Companies can only get marketing research from professional marketing research, a consulting firm, or both. In fact, university professors along with their marketing research interns or university students are a good source of cost-effective, low budget research. This can involve MBA students who can get credit for the research.
Myth: Researchers are ‘well-trained’ in the common tools of the trade. In fact, you may find even the so-called ‘professional’ isn’t well-trained in them. It’s likely that most practitioners in the field have the smarts they need or can pick it up quickly for what they need to do. But, it’s more likely that most don’t have formal training in marketing or social science research methods, statistical analysis, model building, the computer sciences, or other related subjects.
Myth: Most marketing research tools (e.g., Concept Testing, Product Testing, Advertising Testing, etc.) widely used today have demonstrated they are reliable (bring the same results over repeated tests) and are valid (they measure what they are said to test). The truth is that not much is known about their reliability or validity, but the tools in the marketing research discipline are said to be nowhere near as reliable and valid as in other disciplines. And, a weak correlation exists between what the tool is said to measure and what actually results in the real world.
Myth: Research interviewers always ask their survey questions precisely as they are written and always write the respondent’s answer exactly as stated, verbatim. In truth, you’ll find interviewers who will improvise and ask a question in a way they feel more comfortable asking and / or think should be asked so that the respondent will ‘better understand’ what is being asked. And, it’s not unheard of that some interviewers will interpret the respondent’s answer and write their interpretation down instead of the answer verbatim.
Myth: Data analysis is far more important than data collection. You’ve heard ‘garbage in, garbage out’? The quality of the data collection drives the quality of the end result from the analysis. It doesn’t matter how scientific you do the analysis if the data was not collected well. Dumb data, poorly collected makes for ‘death wish’ marketing.
Myth: Focus group interviews are useful to serious marketing decisions. Indeed, they can be useful, but only as a first step, not as the only step. It’s been said that in focus groups, there are no facts, there are only “verbatims.” Focus groups fall under Qualitative Exploratory Research vs. Quantitative Projectable Research.
Myth: If you build a better mousetrap, the world will beat a path to your door. The truth … products don’t sell themselves. You need to package it attractively, get it into distribution locations where customers can buy it, bring it to the attention of people who need it, and convince them that it is truly a better product.
Myth: A company can’t create a market. This essentially is saying companies can only figure out how to offer products or services that customers can articulate when it comes to saying what they want. But, breakthrough products and services … those that customers hadn’t thought about having, those that create new paradigms … occur often enough to prove this wrong.
Myth: A company must offer the highest quality products or services. This thinking can lead to higher costs, which in turn leads to higher prices above the perceived value of the offer. Instead, unless the cost to achieve perfection is low, or if the product must be perfectly ‘defect-free’ in some respect that otherwise could cause troubles, consider offering the product or service at an adequate level of quality at a respectable price. Absolutely perfect products or services will not lead to maximum profits. Some studies show that customer satisfaction peaks, and as the customer satisfaction curve rises, the profit curve drops. So, extremely high-quality products or services are almost never necessary. The difference between excellent and absolutely perfect goes unperceived by practically all consumers.
Myth: The key to profits (and a personal promotion) is to create new products. In contrast, if the company has a range of products or services it can sell to its customers, it’d be better to invest the time, effort and money in informing them of those other products or services, since these are ‘new’ to them. Expand the range of what they know they can buy from you. Cross-sell and up-sell when and where you can. Or, at least figure out how you can sell more of the same to your customers. Try those avenues before investing in research and development of a new product.
Myth: Extending your line of products is the least risky way to introduce new products. The statement assumes the extensions will be profitable. Too many times they are not. Often, the extensions are disappointing or misappropriated and wind up tarnishing the brand image, erode consumer loyalty, and weaken the brand’s reputation. They can take away sales from other similar products from the same company. Or, if they are misnamed in relation to the brand image of the other products, they subsequently fail. Brand extensions have seemingly caused shoppers to shop features so much more and contributed to the auctioning of shelf space by distributors. A multitude of extensions requires more complexity to management efforts. More extensions compete for limited shelf space, which drives up the cost of shelf space. Shelf space management efforts increase, which can contribute to the failure of profitability.
Myth: A product or service that scores high in a concept test will be a sure winner in the marketplace. Maybe. This assumes the concept test is valid and reliable in the first place, that the sample is useful. Even if the test and samples are good, the success will also depend on the advertising, distribution, pricing … all the other elements of marketing.
Myth: The more appealing the product, the more likely its success. If appealing means a lot of people say the like it and ‘intend’ to buy it, then the question remains, “Will it be profitable, and if so, by an amount that is worth offering it?”
Myth: Heavy users are the best target for most marketing efforts. This is not true if the heavy users tend to shop price and good deals since they use a lot of the product or service, or they are very loyal to their brand(s) and it is harder to win them over … or if their heavy use included attributes or features your product or service doesn’t have. You need to examine other factors. Bottom line: some are, but not all across the board. Dig deeper to prove it.
Myth: Money is better spent on finding new customers than further developing the ones you already have. On the contrary, your return on investment on retaining and increasing profitable sales among your current customers is typically money better spent … unless the chance of you holding onto your customers are is less than that of acquiring new ones.
Myth: Your firm’s best prospects are those who appear to be very much like your current customers. This is not always true. It depends on the situation. For example, not all high-income travelers like the American Express card; many don’t have it, for their own reasons. You have to study more deeply to uncover better prospects.
Myth: The way to build your business is to bring non-users into the product buyer category. Maybe this is true for very new product categories or those that are changing rapidly, but for most, it isn’t true. Otherwise, studies have shown the gain is only about 5% – 10% gained for new products, even less for older, established products … assuming you are targeting experienced consumers. It can make some sense to target the ‘never-before’ younger buyers who don’t already have fixed views and opinions about the product and category.
Myth: The big customers are the best customers since they give you the most sales volume. This may be true, as long as they are not the most demanding of price concessions and of service level. If they account for a large volume of your total sales, be careful to have a backup plan or to diversify your customer base, since the big one could quit you and possibly sink your business.
Myth: Segmentation strategies based on prospect/customer needs (aka ‘benefit segmentation’) are the most profitable and give the best understanding of your product or service market. It depends. For example, if the analysis shows the most profitable segment favors two of your competitors, you may be faced with trying to dislodge their loyalty. You’ll need to do further, deeper study to more solidly determine if they are worth pursuing.
Myth: Psychographic (personality type) segmentation is a useful tool for segmenting markets. This fails to be true as personality has little or nothing to do with market behavior. On the other hand, it can be useful when done for a particular product or service.
Myth: Measuring attitude is a useful way to segment markets. This assumes the research knows the critical attitudes (usually 10 or more different factors) driving the purchase behavior in the category and that each of them has been reliably and validly measured by using at least four attitude statements to capture each factor. Still, if you measure attitude alone, you’ll lack useful data. But, combined with certain customer information (e.g., demographics and behavior patterns), this can be the basis for effective targeting strategy … but only if evaluated against criteria related to profitability.