Transcript Intro-copernicus

Counterintuitive Marketing:
Surviving Death Wish Research
prepared for:
PMRG
This 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
March 18, 2002
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.
2
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.
3
“Marketing is the discipline
concerned with solving people’s
problems with products and
services profitably.”
Procter & Gamble
4
“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
5
“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
6
“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
7
“Marketing is the engine that
drives business.”
Phil Kotler
8
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.
9
How Well Is Marketing Working in 2002?
The
Marketing
Performance
Bell Curve
Marketing
Performance
Market Share
Growth
New Product
Success Rate
Advertising ROI
Consumer and
Trade
Promotion
The Zone of
Exceptional Marketing
The Zone of
Conventional Marketing
2%
Well below
average
14%
Below
average
68%
Average marketing
program
14%
Above
average
2%
Well above
average
Embarrassing
Troubling
Disappointing
Pleasing
Amazing
Precipitous
Decline
Significant
Decline
Modest Decline
Significant
Increase
Dramatic
Increase
0%
5%
10%
25%
40%+
Negative
0%
1-4%
5-10%
20%
Disaster
Very
Unprofitable
Marginally
Unprofitable
Profitable
Very
Profitable
10
How Well Is Marketing Working in 2002?
The
Marketing
Performance
Bell Curve
Marketing
Performance
Customer
Satisfaction
Customer
Retention/Loyalty
Customer
Acquisition
Programs
Brand Equity
($ Value)
The Zone of
Exceptional Marketing
The Zone of
Conventional Marketing
2%
Well below
average
14%
Below
average
68%
Average marketing
program
14%
Above
average
2%
Well above
average
Embarrassing
Troubling
Disappointing
Pleasing
Amazing
0-59%
60-69%
70-79%
80-89%
90-95%
0-44%
45-59%
60-74%
75-89%
90-94%
Disturbing
Losses
Significant
Losses
Marginal Losses
Break Even
Profitable
Disturbing
Losses
Dramatic
Losses
Modest
Decline
Stable to
Improving
Dramatic
Improvement
11
Declining Brand Equity is so important that
Copernicus and Market Facts decided
to study it.
12
Airlines
Athletic Shoes
Auto Insurance
Banks
Beers
Bookstores
Bottled water
Catalog clothing
Cigarettes
Colas
Cold Cereals
Cookies
Cosmetics
Credit Cards
Department Stores
Fast Food Restaurants
Gas Stations
Haircare Products
Headache Remedies
Health & Fitness Clubs
Home Entertainment Equipment
Hotels
Household Cleansers
Internet Search Engines
Internet Service Providers
Jewelry
Laundry Detergents
Liquor
Long-Distance Telephone Services
Luxury American Cars
Luxury Foreign Cars
Major Household Appliances
13
Mid-priced American Cars
Mid-priced Foreign Cars
Motor Oils
Newspapers
Office Supply Stores
Personal Computers
Pet Supply Stores
Political Parties
Potato Chips
Rental Cars
Soaps
Spaghetti Sauces
Toothpastes
TV Networks
Weight Loss Programs
Wireless or Cellular Telephone Services
14
The study revealed that out of 48 product
categories, Brand Equity scores are:
Decreasing in 39
Stable in 5
Improving in only 4
15
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.
16
The study led us to conclude that far more
brands are being transformed into
commodities than commodities are being
transformed into brands.
17
M.B.A. stands for
“Murderer of Brand Assets”
18
What guides marketing decisions at
most companies?
IT
20
That’s Intuition and Testosterone.
21
The certainty of being right plus the
personal and professional power to ram it
through the organization.
22
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
23
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….
24
Death Wish Research
25
Death Wish Research
(a.k.a., Misinformation)
 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
26
The Advertising Research Foundation
recently found CEOs put less faith in
marketing research than in most of their
other sources of information.
27
CEOs reported that research had been most
disappointing in predicting new product
success and in measuring advertising’s true
effectiveness.
28
We as marketing researchers are by no means
innocent in this situation.
29
Research Jargon Bingo, Anyone?
R-squared
Logit
Regression
Gap
Analysis
Lisrel
ROI
Revisit the
Numbers
Not
Interaction
Statistically
Significant
Brand Juice
Drilling
Deep
Value
Proposition
Brand Equity
Pareto
Curve
Think
Outside the
Box
Pattern
Recognition
Marketing
Metrics
Best
Practice
Knowledge
Based
Optimal
Data Mining
Neural
Network
Customer
Relationship
Management
Leverage
Ethnographic
Heavy
Users
30
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.
31
It all starts with using the tools and
technology available today to make the most
profitable decision at each stage of the
marketing process.
32
“Strategy is about making
choices. The essence of strategy
is choosing to perform activities
differently than rivals.”
Michael Porter
33
“A T-shirt is not a strategy.”
Joe Tripodi
34
“The most important strategy
decisions are targeting and
positioning. Once you nail
these, everything else follows.”
Phil Kotler
35
Most companies have a
fuzzy market target. They make targeting
decisions in about 5 minutes.
36
Acquisition Costs for Different Targets
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
$50,000+
$12,100
$6,300
$3,500
Software Services
$1000+
$644
$357
$216
Utilities
$800+
$417
$132
$75
Private Banking
37
Create
Hundreds of
Ways to
Segment the
Market
•Attitudes/
Values
•Buying
Behavior
•Motivations
•Psychographics
•Demographics
•Sociographics
•Lifestyles
•Lifestage
•Database
Variables
Test
against
rigorous,
profitrelated
criteria to
identify key
market
drivers
Put into
taxonomic
analysis
(e.g. neural
network,
latent class,
proprietary
cluster)
Evaluate
different
solutions
using
statistical,
managerial,
and
financial
criteria
Identify a
financially
optimal
segmentation and
target(s)
38
Database
and
Third-Party
Variables
Buyer
Motivations
Media
Exposure
Patterns
Buyer
Behavior
“Category
Involvement”
…In fact, variables from
each of these may be
needed to develop segments
Psychographic
Factors
Demographic
Factors
Market
Segments
39
Speedsters Represent 24% of the Population and
Account for 55% of Potential Profitability
% of
Households
Speedsters
Soccer Moms
Car Buffs
Price Shoppers
Loyalists
24%
21%
20%
19%
16%
Share of Current
Spending
Share of
Potential
Profitability
ROI Index
18%
55%
229
8%
38
15%
16%
130
24%
6%
15%
32
17%
26%
94
40
The next task is to create a powerful
positioning directed towards the most
profitable targets.
41
A Positioning Must Be:
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.
42
Apple iPod
BMW
Burger King
Charmin Tissue
Coke
Chevy Trucks
Colgate Total Toothpaste
Disney
GE
Mobil Service Stations
Universal’s Orlando
Visa
Volvo
1000 songs
Exceptional performance
Have it your way
Softness
Authentic, real, original
Tough, strong, durable
Total dental protection
Wholesome family entertainment
Improves the quality of life
Fast, friendly service
Thrills, excitement, escape
Accepted everywhere
Safety
43
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.
44
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.”
45
Only 7% of 340 primetime commercials in
the summer of 2001 communicated a
raison d’être.
46
Many researchers believe that the key to a
great positioning begins by asking people
what is important.
47
How important is it to you that…
….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?
48
A Different Model of Consumer Motivations
“Dream Detection”
“Problem Detection”
“Preference Detection”
Self-reported
“desirability” in
questionnaire
Desirability rating
versus satisfaction
Relationship between
perceptions and
preference
“Motivating Power” of Different Benefits/Attributes
49
Comparative
Advantage
The
A Powerful
Positioning
Zone
of
Parity
Comparative
Disadvantage
A Colossal
Disaster
Low
Normative
Failure
Moderate
Motivating Power
High
50
With the elements of marketing strategy in
place, we devise a plan of action and of
attack that connects inputs with
desired outputs.
51
“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
52
Today marketing plans at most major
companies are developed without any real
knowledge of the relationship between
marketing inputs and outputs.
53
Sales and/or profit objectives are set by top
management without any real insight into
whether they can be achieved.
54
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.
55
It’s no wonder that these plans, held together
by scotch tape and prayers, fail to achieve
their objectives.
56
A Different Approach to Marketing Planning
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.
57
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.
58
DTC Consumer Model
DTC Campaign:
Media Types Employed
TRPs by Month
Media Impact
Share of Voice
Advertising Impact by Media
Public Relations
Website
Word of Mouth
Product Concept:
Benefits, Side Effects, Delivery
Ad Persuasion
Price:
Patient Co-pay Amount
MCO Formulary Acceptance
Generic Availability
Sufferer Needs:
Category Involvement
Sufferer Compliance
Sufferer Universe
Brand or Campaign Awareness
Physician Contact
Physician Compliance
NRx Written
(see Physician submodel)
Pharmacy Visit
Product Availability
NRx Filled
Product Satisfaction/Effectiveness
Repeat and Share of Requirements
Normative TRx/NRx data
Marketing and Manufacturing Costs
TRx
Total Sales/Profits
Forecast conducted with/without DTC Campaign
Incremental Sales/Profits
(due to DTC Campaign)
59
DTC Physician Model
Professional Campaign:
Media Weight & Schedule
Share of Voice
Advertising Impact
Media Impact
Physician Universe
Detailing
Medical Sources:
Ref. books, Journal articles,
Colleague Recommendations
DTC Campaign:
Media Weight & Schedule
Share of Voice
Advertising Impact
Media Impact
Brand or Campaign Awareness
Product Concept:
Benefits, Side Effects, Delivery
Ad Persuasion
Patient Inquiries/Requests
Price:
Patient Co-pay Amount
Sampling
Physician Innovativeness
NRx’s Written
MCO Formulary Acceptance
Generic Availability
Product Availability
Analysis conducted with/without DTC Campaign
Incremental NRx’s Written
(due to DTC Campaign)
60
An Example of a DTC Forecast
61
“All too often a marketing
strategy and plan, however well
conceived, is not implemented
carefully.”
Clancy and Krieg
62
Example of terrible implementation:
“The Case of Subliminal, Sleeper Effects.”
63
Advertising is like the canary
in a mine shaft.
64
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
65
“A good monitoring system not
only tells you how you are doing,
but also what to do.”
Clancy and Krieg
66
Monitor performance to make on-going
adjustments and improvements to the plan—
that model of the marketing mix will help.
67
Year-End Forecast Based on Three Data Points
DTC Campaign Penetration
50%
Objective
40%
30%
Forecast
20%
10%
Actual
0%
13
26
39
52
Weeks after Launch
68
Bottom-line:
Balance intuition with counterintuitive
findings grounded in unimpeachable data
and analysis.
69
“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.”
70
Thank you!
71