strategy+business is published by PwC Strategy& LLC.
or, sign in with:
strategy and business
(originally published by Booz & Company)


Best Business Books 2005: Marketing

Deep Thoughts
Gerald Zaltman’s How Customers Think promises to help readers avoid failure through a better understanding of how to gather more accurate consumer information and analyze it effectively. Like the other authors in this essay, he believes that today’s customers are more skeptical about business (especially marketing) and less loyal to brands. But Professor Zaltman’s main angle is to show that familiar market research methods are ineffective, and to suggest better ones.

Professor Zaltman is a Harvard Business School academic, and his book’s dedication — to his doctoral students — is a tip-off to his writing style. Breezy it is not. But many of the points he makes are worth studying by marketers as well as academics. He notes that “despite the time and money spent on focus groups, surveys, questionnaires and even taste tests, 60 to 80 percent of all new products and services fail within six months.” We have to dig deeper into the unconscious mind, says the author. He goes on to expose the difference between “espoused theory” (what people say they believe) and “theory-in-use” (the belief that underlies what people actually do). This is the reason “consumers say one thing to marketers and then do something completely different in the market.” In other words, the idea that “consumers can readily explain their thinking and behavior” is a fallacy.

Professor Zaltman pins the blame for the perpetuation of marketing fallacies on the “80 percent of market research that serves mainly to reinforce existing conclusions, not to test or develop new possibilities.” His point that marketers continue to misuse surveys and focus groups is right on the money. We have long known that data and understanding are not the same, and that a deeper understanding of consumers enables marketers to find insights that can be used in advertising.

The author lobbies for marketers to engage in “skillful listening,” especially in terms of meeting latent consumer needs. For example, he says marketers tend to think of consumers’ brains as cameras — “mechanical devices that take ‘pictures’ in the form of memories.” Marketers also assume those pictures accurately capture what the person saw. But people’s memories are far more creative and malleable, he says. Memories can change — and be changed — without a person being aware.

And his argument that people don’t generally think in words, and that words don’t provide the whole picture of what people are thinking, is well taken. Sometimes, however, the author is off-base. For instance, he accuses market researchers of asking consumers what they like (or dislike) about an ad, and what they remember about it. Wrong, wrong, wrong. Marketers have long been taught never to ask about the advertisement. Always ask about the product. Only the most discredited research begins by asking consumers to be advertising experts.

The Holy Grail
Nick Wreden’s ProfitBrand tackles the oldest and most intractable marketing question: accountability. How do we know it is working? He calls for “quantifiable benchmarks” of return on investment and profitability. “Without profitability, ultimately there is no brand, no matter how great the buzz or creative image.”

Mr. Wreden takes ambitious steps in explaining the significance of “sustainability” in customer relationships and the value of measuring marketing spending to establish accountability and profitability. “Sustainability is critical, since by some estimates 80–95 per cent of products fail to become brands,” he writes. “Sustainability is also important because more than two-thirds of purchases are one-off buys. Only a brand focused on sustainability will take the steps that lead to second, third or even a lifetime of purchases.”

ProfitBrand amplifies this concept, known in direct-marketing circles as the “true value of a brand”: “A brand is not built by acquiring customers; it is built by keeping them,” he writes. “Most competitive product advantages can be duplicated. The one advantage that cannot be duplicated is customer relationships.” Branding strategies that aim to make a company No. 1 in the market, for example, are doomed to failure, Mr. Wreden argues. That’s because brand sustainability can be achieved only on the basis of relationships formed on customer terms, not company terms.

Follow Us 
Facebook Twitter LinkedIn Google Plus YouTube RSS strategy+business Digital and Mobile products App Store


Sign up to receive s+b newsletters and get a FREE Strategy eBook

You will initially receive up to two newsletters/week. You can unsubscribe from any newsletter by using the link found in each newsletter.