Paul W. Farris, Neil T. Bendle, Phillip E. Pfeifer, and David J. Reibstein,
Marketing Metrics: 50+ Metrics Every Executive Should Master
(Wharton School Publishing, 2006)
Clyde M. Creveling, Lynne Hambleton, and Burke McCarthy,
Six Sigma for Marketing Processes: An Overview for Marketing Executives, Leaders, and Managers
(Prentice Hall, 2006)
The 50-Plus Market: Why the Future Is Age Neutral When It Comes to Marketing and Branding Strategies
(Kogan Page, 2006)
Brand Rejuvenation: How to Protect, Strengthen, and Add Value to Your Brand to Prevent It from Ageing
(Kogan Page, 2006)
Bill Schley and Carl Nichols Jr.,
Why Johnny Can’t Brand: Rediscovering the Lost Art of the Big Idea
Asian Brand Strategy: How Asia Builds Strong Brands
(Palgrave Macmillan, 2005)
Ten years ago, typical CEOs wanted “creativity” or “impact” from marketing. Today, they demand accountability. How well marketing responds to this demand will determine whether that function gets absorbed into other departments, like sales or customer service, or whether it changes to assume a strategic seat at the table, just as purchasing and shipping evolved into supply chain management.
The strategic value of marketing is well recognized. It is critical to launching new products, ensuring customer retention, battling competition, and growing sales. But, at the same time, marketing gets no respect. In downturns, it is the first function frog-marched to the guillotine. New products are “thrown over the wall” at marketing with little warning and, much worse, little input from marketing itself. It’s not surprising that sales and finance spawn many more chief executives than marketing does.
That said, the marketing profession has brought its reputation on itself. Too often, marketing insists on dancing to the beat of its own drummer. It pays homage to creativity or pursues the holy grail of the “big idea” when the rest of the organization runs on data. Like an untrained puppy, it chases the latest fads, like the importance of smells to branding.
Understandably, CEOs are less interested in smells than they are in answers to the question, What are we getting for our money? Despite the fact that marketing generally represents an organization’s second-biggest expense (behind operations), many marketing professionals have difficulty answering that question. Instead, they (and the agencies they hire) cite concepts that lack analytic rigor — “awareness,” “brand essence,” “brand equity.” Or they descend into silliness — “marketecture,” “brandology,” “contenterprise.” Or they recycle concepts such as AIDA (awareness, interest, desire, action), which emerged from itinerant salesmen during the late 1800s; the 4 Ps (product, price, place, and promotion), which dates to the 1920s; and “positioning,” a theory that worked its way into marketing genes back when polyester suits were cool. No wonder the rest of the organization rolls its eyes.
As Jim Stengel, chief marketing officer of Procter & Gamble Company, says, “Marketing is a $450 billion industry, but we are making decisions with less data and discipline than we apply to $100,000 decisions in other aspects of our business.” Several of this year’s best new marketing books tackle the challenge of proving marketing’s worth.
Relief for the Innumerate
The first book, Marketing Metrics: 50+ Metrics Every Executive Should Master, steps into the void between cause and effect to provide the measurements required to evaluate almost every aspect of marketing and sales, including such traditional components as customer perception, product strategy, channel management, promotion, and revenue and cost structures. It also delves into such nontraditional marketing areas as customer profitability, Web metrics, and even the complexities of pricing. That last area is a real service to readers: Pricing is intertwined with almost every aspect of branding, yet most branding books duck the issue with a throwaway insight — “brands enable higher pricing,” for example — that fails to explain how to leverage that key contributor to profitability.
Paul W. Farris, professor of marketing at the University of Virginia’s Darden Business School, and his coauthors Neil T. Bendle, Phillip E. Pfeifer, and David J. Reibstein explain each marketing metric so clearly that even the most numbers-phobic ponytails will want to incorporate them into pitches.
The book really becomes useful when it addresses calculations involving customers. The chapter on customer profitability is exceptional, providing a clear summary of all the issues involved in determining who is making money for your company, and who represents a parasite on your bottom line. The key lesson: All customers are not created equal. Essentially, the most profitable, or best, customers must be rewarded. Less profitable, second-tier customers must be targeted for sales and profit growth. Unprofitable customers must be either made profitable or fired.
In a category that suffers from a surfeit of books related to personal experiences, one-off success stories made possible by budgets and resources unavailable to most firms, outdated theories as quaint as bloodletting, or mantras devoted to “big ideas” or “exceeding expectations,” 50+ Metrics offers insights that crackle like new money. For CEOs and those in marketing trenches needing accountability, this is the best marketing book of the year.
Six Sigma’s New Frontier
Six Sigma has long been a favorite means of achieving accountability in many organizational functions — though rarely in marketing. Now consultants Clyde M. Creveling, Lynne Hambleton, and Burke McCarthy aim to change that with Six Sigma for Marketing Processes. The book focuses on three marketing processes in particular: strategic, defined as product or service portfolio renewal; tactical, which is product or service commercialization; and operational, or post-launch product or service line management. These components are then linked by information systems that allow data to flow seamlessly among all processes and integrated metrics. The book is important, in part, because Six Sigma’s outstanding track record is making many managers consider its potential to tame marketing, every company’s unruly child. Marketing managers have resisted so far, partly because of widespread misperceptions about the nature of Six Sigma.
The first misperception is that it is solely a manufacturing improvement tool. Yes, Six Sigma has achieved its most publicized successes reducing production errors, but it can be applied to any standardized process — and despite its aura of kooky creativity, marketing really is as process-oriented as manufacturing. Look at what is required to send out a press release, develop an ad, or prepare for a trade show: nothing more than a series of “to-dos” (aka processes).
Another misperception is that good Six Sigma practice requires statistical fluency. Yes, statistics are involved, but they are elementary. A half-day of study and a few common spreadsheet formulas will put you on the road to becoming a Six Sigma black belt. The final misperception is that Six Sigma is only about reducing errors or defects. Yes, that is a part of Six Sigma, but, much more important, Six Sigma is a data-driven system for understanding what customers value and delivering that value to them. Isn’t that what marketing is all about?
Like Six Sigma for other parts of the organization, Six Sigma for marketing seeks improvement by elimination of variability and waste in processes. It revolves around five steps, known by the shorthand DMAIC: defining the problem, measuring issues associated with the problem, analyzing the data to determine causes of problems, improving the process, and controlling the process so that the problem does not recur. Measurement is key. But Six Sigma practice doesn’t focus on the measurements that are easy to define and put to use. Rather, it looks for the leading indicators that enable proactive decision making.
The benefits of implementing Six Sigma in marketing are undeniable. But although Six Sigma for Marketing Processes effectively explains what to do, it doesn’t explain how to do it. How do you implement suggested solutions, for example, if you are unfamiliar with Pugh processes (defined in an extensive glossary as a matrix consisting of “criteria based on the Voice of the Customer and its relationship to specific candidate design concepts”)? The explanation of how would have been greatly enhanced with a few case histories. Smaller or resource-constrained companies in particular would undoubtedly like to know which of the text’s many, many steps and analyses can be skipped.
Because of the great demand for accountability, someone is probably working on a practical book that outlines how Six Sigma can realistically be applied to marketing, backed up with actual case studies. Six Sigma for Marketing Processes, which pioneers the difficult task of applying Six Sigma to marketing, will undoubtedly be used as a primary resource for that book, but, unfortunately, it is not the handbook for accountability that marketing executives ultimately need.
Finding Green in Gray Hair
Dick Stroud makes his heretical point on the first page of the introduction to The 50-Plus Market: “The principles of marketing to a 30-year-old are the same as marketing to somebody aged 75. Marketing theory is intrinsically age neutral.”
Consider the mind-set of the typical marketer who will read that passage. The 18- to 35-year-old market has long been perceived as the biggest gift under the Christmas tree, prized by television advertisers and coveted by almost everyone in consumer markets. The reasons for this are engraved on several million slide presentations. That demographic slice has more disposable income. It is open to experimenting with new brands, whereas older consumers are more brand loyal (read “stuck in their ways”) and less responsive to advertising. A brand becomes “cool” when blessed by this market.
No wonder most people with crow’s-feet feel as though they have been put out to advertising pasture. Studies show that only 5 to 15 percent of advertising is aimed at the 50-plus market, even though this group represents nearly half of prime-time television audiences. According to surveys, the majority of those over 50 feel that advertising portrays them poorly and 86 percent feel that advertising does not relate to them.
But do the eternal verities concerning the 18-to-35 market still hold up? U.S. boomers, who did so much as consumers to shape marketing nostrums, have long since slipped over the outer chronological edge of this category, and markets in other countries are growing older too. China, which many see as a potential marketing gold mine, will soon start aging faster than any other country in history. Japan, Italy, and many other countries, especially those in Europe, also have aging populations. Efforts to capture and hold the senior market (defined here as anyone older than 35) will affect branding efforts, customer and product development, and even profitability.
If the clichés about the 18-to-35 market are hollow, then almost every creative storyboard will have to be redrawn: Senior markets can be retapped for new yields; boomers will have one more chance to rock the marketing world. In fact, one contributor to 50-Plus asserts, “The paradox is that the youth market is now the market of the past and the mature consumer markets are now, and will continue to be, the markets of the future.” Mr. Stroud further argues, backed up by research from the global media group OMD and input from top marketers worldwide, that advertisers lose potential market share and profitability every time they look to chase baby faces instead of wrinkles.
One reason is that the number of older consumers is growing faster than the number of younger ones, and they are the main purchasers of transportation, health care, housing, food, pensions, and personal insurance. Older consumers can be more lucrative. They have higher incomes, enabling them to buy 35 to 50 percent of all travel services, 65 percent of all new cars, and 50 percent of face care products.
Why is there such abysmal ignorance of the realities of the 50-plus market? One reason, of course, is that archaic truisms are perpetuated rather than researched. These so-called truths include “to be cool, you have to be young” and, my favorite, “their lifetime value is too short.” Another reason is that the advertising and marketing industry is overwhelmingly youth-centric. More than 80 percent of those who work in the U.K. advertising industry are under 40.
Stroud outlines “three truths that should be emblazoned on the front covers of all books about marketing: there is no simple formula linking a person’s age to how they behave as consumers; when age does appear to be linked to differences in behavior, the variations are small; and the behavior of older people varies by nationality.” In other words, the relationship between age and consumer behavior is tenuous, at best.
If the 50-plus market is so attractive, what are the best ways to approach it? One key is not to generalize about the way seniors behave. Another is segmentation by criteria other than age. For example, not only is 50 an arbitrary age, but chronological age also differs from perceived age. Generally, we see ourselves as being 10 to 15 years younger than what our driver’s license tells us. One method of segmentation gaining ground is geodemographics. Now being used by American Express, Reader’s Digest, and other companies, geodemographics classifies consumers according to the type of neighborhood they live in. Such markets can cross age boundaries.
So is age meaningless in marketing? No, but Mr. Stroud suggests that age be considered from a physical, not psychological, vantage point. This means that companies need to make and market products that accommodate declining senses of touch, smell, and eyesight, as well as loss of hearing and manual dexterity.
The appendixes in 50-Plus, which cover design factors for senior consumers, guidelines for age-friendly Web sites, and a test to determine whether marketing strategies are age neutral, are particularly useful.
The book successfully examines a market that has been overlooked as a result of decades-old myths, lack of research, and the narcissistic, youth-oriented makeup of the advertising industry. This is an excellent book for companies looking to stay ahead of an inevitable demographic change instead of being swamped by it.
Help for the Aging Brand
Most branding books focus on building products into brands, but there’s another important issue: sustainability. How do you support and maintain a brand over time so that it continues to pay back earlier investments? How can you pump new life into an aging cash cow? How can you connect with new generations of consumers? According to Brand Rejuvenation, “a brand ages in the eyes of its customers and/or its consumers because it loses its appeal, its relevance and, usually, all or part of its identity.” What causes a brand to age, and more importantly, what can be done about it?
The first step to brand rejuvenation is to conduct a brand audit to determine whether the brand is aging and has enough long-term potential to justify rejuvenation investments. Jean-Marc Lehu, an associate professor of marketing at Panthéon Sorbonne University, provides a scorecard to help. The symptoms of aging include a slowdown of new product launches, nonconformity to technological standards, out-of-fashion colors, increasing average age of users, declining number of customer contacts, and an aging sales force. The brand audit must also cover communications, looking for such weaknesses as an irrelevant brand spokesperson, old-fashioned packaging, and — horrors! — “ad campaigns not (well) ranked in ad festivals and contests.” (Nothing in this brand scorecard mentions declining sales or profitability.) The audit’s results are graded according to the following indexes: the potential danger of the symptoms, how easy the problem is to solve, the potential cost, and the time required.
Brand Rejuvenation stresses that just because a brand is targeted at senior citizens does not mean it is an aging brand. Nor can a brand’s aging be blamed on its chronological age; rather, decrepitude is based on a brand’s perceived age. In other words, a brand ages because its target market is not refreshed over time. That means rejuvenation requires making a brand more contemporary, and the primary tool for doing that is usually advertising, although this is not an instant cure. Other options include using celebrities, “the weapons of choice when it comes to rejuvenating the brand”; cobranding; expanding distribution; and modernizing the brand’s visual identity.
But resuscitating brands should really be a last resort. Rather, companies should pursue continuous strategies to prevent the aging of a brand. This approach is less expensive and avoids potential panic. The author provides useful but sometimes confusing tools for analyzing a brand’s need for rejuvenation.
Like other branding books, this one suffers from the flaw of paying homage to the brand, not the customer. In Professor Lehu’s words, “The brand is there to serve its products, which will serve it in return.” No, no, no! The brand is there only to serve customers because, obviously, without customers, there is no brand. Moreover, little attention is paid to the Internet, which would seem an obvious tool to ensure relevancy to new generations of consumers. And the book offers no metrics, beyond one kludgy formula, to ensure accountability.
The value of Brand Rejuvenation lies in making clear the need to keep brands relevant to customers. It also reminds readers that managers must be as focused on the longevity of brands as they are on successful launches. But although this book has a few good ideas to ensure relevancy, it places most of its faith in the skills of individual brand managers. Brand Rejuvenation largely ignores the most important way to ensure sustainability: continuous interaction with customers, suppliers, and distributors, and the willingness — indeed, the need — to use their input to guarantee that the brand continues to deliver value.
Eight Weeks to a Winning Brand
Given the strategic importance of branding and the resources it requires, why can’t more companies brand? Why do so many products fail to become brands? In Why Johnny Can’t Brand, authors Bill Schley and Carl Nichols Jr. argue that branding failures result from the lack of a dominant selling idea (DSI), an update on that old sales workhorse, the unique selling proposition. A DSI, consisting of fusing a corporate or product name with a specialty in a customer’s mind, can deliver “more market share, more sales, more competitive strength, more growth, and more asset value.” And hopefully, more profitability.
Johnny outlines a process for developing a DSI: choosing a specialty to excel in, articulating that specialty briefly and memorably, and creating the visual and other building blocks that support the DSI. The final step is “Ring the bell to open the New York Stock Exchange on Monday. No reason not to think big.” Examples of DSI include Greyhound Bus Lines’ “Leave the Driving to Us,” United’s “Fly the Friendly Skies,” and Maxwell House coffee’s “Good to the Last Drop.” Supporting a DSI requires five key elements: a great name; a unique, ownable specialty; a tagline; high-impact visuals; and excellent organizational performance.
With its emphasis on being number one or number two in a category and the importance of mental “ownership” of a word or concept, Johnny is strongly based on the landmark book Positioning: The Battle for Your Mind, by Al Ries and Jack Trout (McGraw-Hill, 1981), published more than 20 years ago. Like other die-hard loyalists of the “positioning” theory, Johnny cannot address any issue related to accountability, and customers are addressed only as receptacles for implanted words that can be “owned.” In fact, customers and profitability aren’t even listed in the book’s index. How can any book on branding be taken seriously if it has not considered the customers who support brands and the profitability that sustains them?
But the biggest failing of this book and the other positioning clones is that it neglects accountability. Can any company claim that its positioning has improved 12 percent over last year or that its positioning is four times better than that of its nearest competitor? Without such metrics, the positioning theory has no accountability, and without accountability, there is no credibility with CEOs. Still, if you desire to know how to perform a marketing shibboleth, then this book provides a coherent, easy-to-follow road map.
New Paradigm for Asia
The hottest topic in Asia is how to make what is called the OEM–OBM leap. In other words, how can Asian firms move from OEM (original equipment manufacturer) status — as the producers of all the brands displayed on Carrefour and Wal-Mart shelves — to OBM (original brand manufacturer) status, with the cachet, say, of a Lexus or a Sony? According to one study, fewer than 10 global brands originated in Asia.
Yet all the external elements are in place for original Asian brands to thrive. The disposable income of Asia’s rapidly growing population rises each year. Asian firms that can meet demanding OEM requirements can certainly meet consumer requirements. Cheap money in most Asian markets makes capital easy to raise. The same cultural forces — movies and television — that once propelled U.S. brands overseas are now exposing Asian brands worldwide, thanks to the global popularity of Japanese anime, South Korean soap operas, and Hong Kong and Taiwanese movies.
In Asian Brand Strategy: How Asia Builds Strong Brands, branding consultant Martin Roll attempts to explain why the number of Asian brands is not commensurate with the region’s economic, manufacturing, and consumer power. The reasons include an insufficient understanding within Asian companies of the value of branding, an overemphasis on short-term results, and a focus on marketing tactics rather than on strategic branding. Mr. Roll perceptively observes, “Most Asian firms still view branding as advertising or logo design.” Other factors include lack of intellectual property protection and little innovation in product development.
To ensure that Asian branding power matches its economic power, Mr. Roll suggests “a new paradigm for the Asian boardroom.” A brand-driven organization, he notes, has three traits: the right boardroom mind-set, appropriate organizational skill sets, and sufficient organizational and financial resources allocated to branding. The creation of the new paradigm requires that a company shift from viewing branding as a marketing function to seeing “branding as the DNA and most essential function of the firm led by the boardroom,” and that it develop a better understanding of consumer behavior, abandon colonial imagery of the past, become a trendsetter, and align organizational functions behind the importance of branding.
The book’s most interesting chapter looks at how contemporary Asian dynamics affect original brand manufacturing. Many Westerners still see Asia archaically as made up of peasants, pagodas, and Buddhist priests, but it is now modern and extremely urban, characterized by a mosaic of cultures and a willingness to look East instead of West for ideals. Other factors include a large rural–urban divide and a substantial Islamic presence. Finally, Asian social structures and mores are different from those in the West: “The Western need for self-actualization is replaced in the Asian context by social needs of status, admiration and affiliation. Autonomy and independence are not as important or at least do not have the same connotations as in the West.” Because of the multiplicity of languages, cultures, and religions, social in-groups are extremely important.
Mr. Roll outlines 10 steps to building an Asian brand, beginning with “the CEO needs to lead the brand strategy work.” Thereafter, he advises companies to “build your own model as not every model suits all,” “involve your stakeholders including the customers,” “advance the corporate vision,” “exploit new technology,” empower people to become brand ambassadors,” “create the right delivery system,” “communicate!” “measure brand performance,” and “adjust regularly — be your own brand agent.” This list represents excellent advice for all companies, not just Asian ones.
However, anyone with even minimal branding experience in Asia understands that Asian companies face two sets of challenges. The first set involves the branding hurdles every company faces, such as distribution, product quality, customer relationships, promotion, and measurement. The second involves challenges unique to Asia, including distribution across a large geographic area; low per-capita incomes in many countries; a vast number of cultural, linguistic, and religious differences that can complicate packaging and messaging; government restrictions on marketing activities; hyperacute price consciousness; and the collectivist attitude noted earlier. Clearly, management or branding tactics common in the West may not always work in Asia.
Finally, South Korea, Singapore, and Japan are the most wired countries on Earth, and China’s Internet penetration is growing exponentially. Yet, curiously, the book’s index lists just one reference to the Internet, and digital branding is ignored.
As Mr. Roll correctly notes, Asian companies strongly want to make the leap from OEM to OBM. They recognize that it will lead to greater profitability, opportunities for better strategic relationships, and increased leverage for their marketing spending. Mr. Roll has packaged his invaluable insights in conventional “marketingspeak” from the 1990s, such as “brand personality,” “change agents,” and the impossible-to-measure “brand essence,” but they will nonetheless serve as a well-written introduction to historical marketing for newly minted brand managers.
Nick Wreden ([email protected]), a marketing consultant who works with large technology companies and other Fortune 500 firms, is the author of ProfitBrand: How to Increase the Profitability, Accountability and Sustainability of Brands (Kogan Page, 2005).