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marketing insights

M a r k e t i n g

R o i n a n t i c

o r

R e a l i s t i c ?

S e t t in g u n r e a l is t ic g o a ls g iv e s m a r k e t i n g a b a d

r a p .

n d r e w E k r e n b e r g

Many goals commonly set in marketing are unrealistic. They are

therefore doomed to failure from the start. Such romantic mar-

keting dreams include sustained growth, brand differentiation,

persuasive advertising, profit maximization, and knowledge

management. When marketers fail to reach any of these

unreachabie goals, it gives marketing a bad name.

M

arketing is under pressure. People increasingly want to

know if it delivers on its promises. Everyone asks how

advertising can be evaluated. Some think that brands

them selve s are dea d. In 1993. the McKiHsey Quarterly was alrea dy

worried about marketing's midlife cr isis. Today we wonder: Is

marketing needed?

These doubts arise largely because marketing is judged

by goals such as growth. If brands don't grow, then marketing

must be fai l ing . Marketing goals are. in a word, roma ntic, w hich

the d ict ionary def ines as imagin at ive, visionary, and remote

from experience.

Marketing often l ives in a pretend world where anything

goes If they crave loyalty, marketers prom ote a loya lty program .

To appear proactive, they intone added values. To repo sition

the brand, they throw in the phrase for young people, Who sets

these improbable objectives? Marketers do. For instance, is there

a marketing strategy that does not supinely aim at increasing

shareholder value?

1

believe marke ting is necessary because it aims to impos e

customer orienta tion on our m ore naturally self- focused produc-

tion mindset. However, i t does not work if romantic and preten-

tious goals are set. What fol lows is a brief explication of five

romantic marketing goals and their realistic alternatives.

FIVE

M RKETING

GO LS

^ \

Goal

G r o w t h '

2 . D i f f e r e n i ia t i o n

3 . A d v e r t is i n g , ,

4 .

P r o f i t s

5 ,

K n o w l e dg e

Romantic

U n i v e r s a l

S u s t a i n a b l e

P e r s u a s i v e

M a x i m i z i n g

I n s t a n t

Realist

R a r e

E p t i e m e r a l

P u b l i c i z i n g

t i s l i c i n g

A c c u m u l a t i v e

GO L 1 : GROWTH

when marketers are asked about their goals, they usu

talk about growth. However, most brands and most compan

do not grow much most of the time, as the usual year-by-y

league tables indicate. Marketing usually fal ls short of this

get, with nothing dramatic to shout about. This leads the w

at large to claim that marketing has failed lagain). If so, howe

it is only because marketers set unachievable goals of big s

tained organic growthand people believed them.

The Apri l and 9. 2 0 0 1 , issues of Adufrlisint? A^f re port ed o

giant marketing turnaround at McDonald's, After spending m

than Si bi l l io n to bring more variety to its men u, the com pan

new mantra is to simplify the core offerings. The recipe now i

refocus, expand the delivery concepts, create new retail oppo

nit ies,and improve cus tomer service and satisfaction. It plan

pursue th is Kot ler ish b luepr int of in i t ia t ives simply by do

each better. This shou ld, a spokesperson con firmed, double

U,S, business,

We can a l l hope for some growth, but real ist ica l ly

should not expect much. The outcome usual ly wi l l not

growth anymore than it was last year when we did m

the same th ings. Typical ly, a recent company repor t stat

The mis sion of this com pany is grow th. Unfortun ately. ,,,

fact, b ig and susta ined growth is usual ly gained only throu

mergers and acquisitions.

The inhibitin g factor is com petition . If you have a 20% br

and are therefore quit e big . you st i l l have 80% of the m ar

against you. About 80% of the retail distr ib ution , advertising,

most of what your customers actually buy and use is ot

brands. Survival is the name of the gameyou sti l l want t o h

2 0 next year and you usually

w i l l ,

if you work at it. If you

hard to stand

st i l l .

you wil l survive. Anything more, l ike gain

from a com petitor error, is an occasional bonus.

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But can a no growth except sometimes strategy be accept-

Ibelieve so. Colleagues in other parts of

iccounting. production, quality control, human resources, or

selves a 5% growth target, which they almost

achieve year after year Few companies in fact invest [or

k) sufficiently to deserve ongoing growth. Avis, I guess, has

O L

:

B R N D

DIFFEREN TI TION

For most marketers it goes without saying that, if your brand

to be bought, it needs to be at least a bit different, lohn

Market Leader You must

ure, most importantly, that your brand is differentiated in a

ul though not necessarily a massive way . . . Give the

But this romantic, if ubiquitous, make-believe approach still

ns remote from experience. What reason does anyone

like changing black chocolate into white?

In practice, markets continue to show that competitive

in fact very similar Michael Porter's sustainable com-

etitors be effectively different or better, thus preventing

from getting or staying ahead.

The lastingly better mousetrap is a purely romantic idea, and

better

better

Luckily, brands do not have to appear different to the con-

g a s

coffee, or condoms, or needs a hotel

r the night). In our free economy, the consumer then has

brandbutonly if he or she wants the product.

The consumer could then choose any reasonable brand by

If

A

were truly much better than B, whether it be sweeter,

But rather than tossing pennies between look-alikes, the

There are of course minor differences between brands

particular Muesli), but these small differences are

seldom the reason for first choosing a brand. We normally

don't even know about such differences before trying the

brand. They generally are not deemed important enough to be

described on the packaging, mentioned in the advertisements,

or copied by the competition. So consumers are left to choose

between what seem like largely substitutable, similar offer-

ings .As leremy Bullmore's focus-group lady famously said, I

know all these brands are the same, I just have to decide

which is best,

It's not that serious product differentiation is difficult to

achieve. In fact, there is much of it around (e.g,, large vs, small

packages, tomato vs. tamarind flavors, 2-, 3-, 4- or 5-door car

models, a guaranteed money-back investment bond vs. a fixed

interest one). However, most competitive brands have these key

product variants. The realist view of branding is that nearly iden-

tical goods are made distinctive by being branded with a name,

symbol, logo, distinctive packaging, advertising, and memory

associations. However, for the most part, they do not necessarily

function differently.

GO L

3:

DVE RTISING

TH T

PE RSU DE S

The romantic view is that advertising is powerful. It is sup-

posed to persuade people to change what they feel, think, or do.

Otherwise why would companies spend millions on it? Yet in

practice this isn't the case. Literature sports no generalizable evi-

dence on many or any lasting persuasive effects of advertising

at least not enough to justify a global spend of billions. Although

people see or hear hundreds or thousands of ads a day, mostly

they do nothing in response, and sales and images seldom

change. Why else the unceasing chest beating about advertis-

ing's lack of accountability?

The notion that advertising is strongly persuasive has

become pervasive only recently (after the collapse of P&G's Day-

After-Recall as the much simpler sine qua non). In fact, dictionar-

ies still mostly definite advertising as publicity or merely bring-

ing to pubiic notice.

If advertising s chosen goal really is to persuade and change

what consumers feel and believe, then well over the proverbial

half of advertising is failing. That, however, is just not so.

Competent brand advertising generally does not fall, but peo-

ple's exotic expectations of its outcome do.

Advertising lacks consistently dynamic effects, once again,

because of competition. Your competitors' omnipresent retail

availability, their quality control, category management, CRM,

promotion, and advertising all interfere. Left to

itself,

of course,

advertising your brand would work wonders.

Realistically, advertising works as paid creative publicity. As

we will argue elsewhere, a competent ad automatically publicizes

its brand and the brand name. Ads can create and refresh mem-

ory traces and associations. Publicity can affect whether a con-

sumer finds the brand salient, familiar, and reputablein short,

a brand they want to buy. Indeed, the more alike two brands are,

the more effectively creative publicity can work as virtually the

only thing to separate them in the short and longer term.

A more realistic task for advertising is not to change what

people think about your brand, which is hard to achieve, but to

have them think about your brand at all. As Samuel lohnson said

almost three hundred years ago, Man does not need to be

informed, but he has to be reminded,

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GO L : PROFIT

M XIMIZING

Maximizing shareholder value has become the ubiquitous

goal in the western world. This sounds imaginative, visionary,

and even businesslike, but it is strictiy impossible and remote

from reality. Faced with a theoretical profit curve, it's easy to pick

the highest point. But in the real world you could not literally

maximize your profit because you wouldn't know when you've

achieved it. You could surely always make more profit.

Seeking to maximize profits also has some drawbacks. Being

uncommonly profitable would gain the attention of both regula-

tors and/or competi tors who could then easi ly undercut you.

Maximizing iust one thing means potentially sacrificing every-

thing else (e.g., quality time or employees' health, as Charles

Handy reportedl.

Technically, maximizing or optimizing is a bad taskmaster

and leads to the wrong conclusions. For example, many

economists would have us believe consumers choose between

brands by "maximizing their utilities." Logit modeling and Daniel

McFadden's recent Nobel prize-winning Discrete Choice Theory oper-

ate

on this premise. But in the near-steady-state markets that are

typical most of the time, each rationally optimizing consumer

would always choose the s am e "best" brand. However, all the evi-

dence shows otherwise.

The realist alternative is to satisfice. as the late and great

Nobel laureate Herbert Simon opined some forty years ago. Both

managers and consumers choose what is "good enough," not

what is supp osed ly "best." They strive to make a good profit, to

reach suboptimal mult iple goals, and to choose an adequate

product (since nothing better can usually be found). Darwin got it

wrong; It's not survival of the fittest, but survival of the fit enough.

GO L5 :

KNOWLEDGE M N GEMENT

Knowledge m anagem ent is the latest m arketing m antra, but

this is unrealistic when we are drowning in catadupes of undi-

gested data. Marketing managers to date have little or no sys-

tem atic know ledge to ma nage. As their life raft, analy sts and

their clients cling to the Scientification of Non-Knowledge

(SONKINGi, which espouses "I know nothing, but have tech-

niques." These promise immediate success in the form of a best-

fit model from just a single set of data.

For example, one minute the analyst does not know how

Advertising (A) causes Sales (S); the next minute his computer

ha sS = ^.39A-(- 14.56 as the "best" answ er The label on th e least-

squares SPSS/SAS regression bottie says so, which any reader

can check. (The great Henry Mintzberg has said that "a technique

is something you can use instead of a brain.")

Accepting our academic colleagues' regressions would, how-

ever, require a romantic act of faith. No statistically derived

"best" cluster, market segment, price elasticity, or econometric

model (e.g., S = i39A + 14,56) has ever passed into lasting mar-

keting know-how or textbooks. Where is the "best-fitting" cluster

or model from 10 years ago? With the P Gind uced spa te of multi-

variate regressions, there should of course be not just one or two

such success stories, but hundreds and thousands.

Generalizabie knowledge of marketing is mostly prominent

only by its absence. This is because the fashionable economet-

ric and other such statistical techniques were never designed to

develop generalized knowledge, nor is this ever even claim

Open a textbook or any modeling report, and you will find a

ysis procedures applied to iust a single set of data (SSoD),

romantic delusion is that this new and isolated result is t

the best .

The realist alternative is to build on many sets of d

(MSoD). Success then Is a result known to hold across m

very different brand s, prod ucts or services, years, countries,

other varying conditions, within known limits and with kno

exceptions. This is called science. It provides marketers w

general izable and reusable knowledge to manage, such as

idea that loyalty does not vary from brand to brand ex

with market share, or that price promotions appeal only to y

existing customers.

B A C K T O R E A L I T Y

Marketing is not taken as seriously by our colleagues

the public as we would like, but we have only ourselve

blam e. We tend t o set go als that ca nnot be fulfilled, such as

ta ined growth, brand differentiat ion, persuasive advert is

added values (e.g., David Hearn's, "putting a gold stripe on

pack and charging more") , maximum prof i ts or shareho

value, and instant new knowledge based on iust a single

lated set of data.

When these romantic goals fail to materialize, marke

gets blamed. To combat this, we need to set and work tow

more realistic goals so marketing can be appreciated for wh

can and cannot do.

Author s note:

This article is derived from an invited paper to

MRSA Conference in Melbourne and ispart of theRS'D Initiat

South Bank, London, and the Marketing Science Centre. Adela

ADDITIONAL READING

Bul I more, leremy (1998),Sefiind the Scenes in Advertising. H

Thames: Admap Publications.

Ehrenberg, Andrew, Neil Barnard, and lohn Scriven 11997),

"Differentiation or Salie nce ?" journal

of dvertising Research.

(37),

7-14.

and lohn Bound

(20001,

"Turning Data into Knowledge,"

MarketingResearch: State-of-the-Ari Perspectives.

Ch uck Ch ak

ed. Chicago,

IL.

American Marketing Association, 23-46.

Handy, Charles B. (1994), Th eEmpty Raincoat Making Sense of

future.London: Hutchinson,

Simon, Herbert (1947), Administrative Behavior.New York:

Macmillan.

Andrew Ehrenberg

is director of South Bank University's

R(S^D [niliative. a program of basic research

into marketing issues supported by some

90 North American and European companie

He may be reached at ehrenba@sbu,ac,uk.

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