October 22, 2008

Topic: Effective Marketing

Reference: Corkindale, David. “Seven pieces of conventional wisdom-and why they are wrong.” The Wall Street Journal, October 20, 2008. R10.

Many executives distrust the investments made in marketing for a number of reasons. One is that there is no direct correlation between increased marketing and increased sales. Marketing often shies away from being judged by financial returns, while just about every other department has fully adopted the need for financial justification.

October 22, 2008

Topic: Effective Marketing

Reference: Corkindale, David. “Seven pieces of conventional wisdom-and why they are wrong.” The Wall Street Journal, October 20, 2008. R10.

Many executives distrust the investments made in marketing for a number of reasons. One is that there is no direct correlation between increased marketing and increased sales. Marketing often shies away from being judged by financial returns, while just about every other department has fully adopted the need for financial justification. Another is that marketing is traditionally slow to adopt new, more modern paradigms to change the way that business is done. In the referenced article the commentator has a great grasp of these shortfalls and offers some insight not often projected by others. “The problem is that too much marketing is based on conventional wisdom. And the old assumptions ignore advances in the understanding of consumer behavior-discoveries that have been validated across a wide range of product categories in markets around the world.” He debunks several marketing observations that I completely agree with. Models based on market segments for repertoire goods-where consumers buy several goods and not one brand-often miss the mark. In some repertoire markets loyal customers are not the best customers. There are not multiple ways to expand brands-the one that works is to increase the customer base and/or enter into new markets. Differentiation is not necessarily the best way to new customers either, rather providing better product and services that customers really want is the best way (e.g. Toyota). Promotions generally reward current customers, but do not create new ones. “Brand strength amplifies the effect of all other elements of marketing.  Coca Cola…has been very good at the four P’s but its brand strength multiplies this capability greatly.” Therefore brand strength cures a lot of problems notwithstanding the classical benefits of a sound four P strategy (Price-Promotion-Product-Place). My favorite off of this list is to expand customers or to enter into new markets. At its core, my experience tells me that this is exactly the right strategy. Let me know your thoughts on the right approach to marketing.

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