Why investors are attracted to the number zero.
Based on research by Ajay Kalra and David Soberman
How To Bring Strategic Thinking Back Into Corporate Marketing
- Most firms emphasize speed over finesse. Both, though, are necessary for marketing success.
- Building a competitive corporate culture is great — unless it saps the company’s efficiency and profits.
- Corporate managers need to do a better job of asking critical questions, doing comprehensive research and synthesizing results.
You’re the regional brand manager for a light beer company based in Houston and you happily dominate the competition. You’ve got the best light beer in America and everybody knows it.
Then you learn that a rival beer company, which for years has sponsored the Dallas slow-pitch softball tournament, no longer has cash to support their signature event. True, it’s not clear that the tournament is the right fit for your brand. But the head of sales tells you he wants to get behind it. So you buy in.
Then reality hits. Those slow-pitch softball players don’t like light beer — and they won’t drink it. Your sales languish. You may be the tournament sponsor, but anyone can see the players are drinking something else. What to do?
If you’re like countless American firms, you declare the sponsorship a success year after year regardless of what is really going on.
Rice Business professor Ajay Kalra joined David Soberman of the University of Toronto to investigate just this kind of mishap. While prevailing wisdom blames marketing failures on CEOs and other senior management, such failures often begin at the bottom and work their way up. This triggers a chain of bad analysis, bad decisions and worse results.
Most brand managers, the researchers found, make decisions by setting market objectives, developing a strategy and implementing it. The results of that strategy are then used to evaluate the next set of decisions to be made.
The problem with this approach is that it leaves out a crucial set of prior questions. What, for example, are the consumer perceptions about the product that may affect their behavior over time? What analysis exists about the competition?
Once brand managers have asked key questions, they need to get the answers. In some cases that may entail a market study or other original research. Over the past half-century, some of the biggest advances in marketing management have to do with data collection and analysis techniques, including focus groups and attitude surveys. Once the research is complete, it needs to be synthesized, and usually presented to a cross-section of people within the firm.
Sounds simple enough. Why, then, do so few brand managers follow this rational sequence before launching a new campaign?
One answer is time. It takes roughly two-and-a-half months for a firm to launch a marketing campaign. Most brand managers, the researchers argue, want to shorten that time as much as possible to stay ahead of the competition. Strategic analysis typically gets short shrift.
When you’re short on time, the pressure mounts. Lacking serious strategic analysis, managers tend to look to their most experienced colleagues for advice. The result: The quality of decision-making depends almost entirely on the quality of advice the manager gets. Maybe she’ll get lucky and find a visionary to guide the team through a thicket of issues. Often, however, she won’t.
Short-circuiting the decision-making process, in fact, often becomes a part of the corporate culture. This happens in part because companies have developed such a culture of rivalry that they are willing to make what are essentially irrational decisions in order to be seen as “winners.”
In 2004, in Scotland for example, Ryanair and EasyJet were engaged in such a fierce competition that the airlines were literally giving away seats for free: great if you’re a customer, but not generally good for business.
All of this points to the need for a serious rethink around strategic planning, research and even corporate culture, Kalra and Soberman say. Speed is important to the planning process, but so too is finesse. Training needs to de-emphasize competition with the enemy in favor of strategies that maximize profits. Instead of relying on what is often half-baked, informal advice from colleagues, firms need to identify sources of expertise at each level of the organization.
To boost this expertise, managers who are too good to fire but not good enough to promote can be moved laterally, allowing them to accumulate meaningful expertise. After all, almost anyone is capable of learning. There is no reason why people — or firms — should commit to repeating their mistakes.
Ajay Kalra is the Herbert S. Autrey Professor of Marketing at Jones Graduate School of Business at Rice University.
To learn more, please see: Kalra, A., Soberman, D. The Forgotten Side of Marketing. Journal of Brand Management, (2010). 301-314.