When it comes to your strategy, nothing is more important than market research. My guest today is Mark Ritson. He’s a marketing expert, consultant, and writer for Marketing Week. Mark sat down with me to share his principles for developing a marketing strategy and how to execute market research.
Mark dug into several fascinating tactics that I’d never heard before this interview. I know you’re going to gain a ton of value from this episode.
listen to this episode
- The truth about Steve Jobs dislike for market research
- Why your reputation can’t really be destroyed overnight
- How nearly all marketers miss the key step in their strategy
- The two most important questions to ask your customers
- What mistake companies make when it comes to segmentation
- How to decide which market you should be targeting
- The surprising reason you have less competition than you think
- Marketing Week — Weekly column by Mark Ritson
- Survey Monkey
- Byron Sharp
- The Game-Changer: How You Can Drive Revenue and Profit Growth with Innovation by A.G. Lafley
- Playing to Win: How Strategy Really Works
- Mini MBA in Marketing
- Drayton Bird
- Marketing Week
- @markritson — Mark Ritson on Twitter
- Mark Ritson on LinkedIn
Louis: Bonjour, Bonjour, and welcome to another episode of EveryoneHatesMarketers.com, the marketing podcast for marketers, founders, and tech people, who are just sick of shady, aggressive marketing. I’m your host, Louis Grenier.
And my guest today is quite a character. I discovered him through one of you, who recommended me to my guest today. He’s been writing a weekly column on branding for Marketing Week for over a decade. So, you might know him from this. And I’ve read a few of his articles that are cynical, funny, smart, teach you a lot of stuff around marketing. So, I couldn’t wait to have Mark Ritson on the show.
Mark, welcome aboard.
Mark: Bonjour, Louis. I should say, Bonsoir. I’m down in Australia, so it’s evening down here.
Louis: Yeah, thank you for making the time in the evening, I appreciate it.
Mark: No problem.
Louis: So, you have a PHD in marketing from Lancaster University. You’re now a professor of marketing at Melbourne Business School. You’ve been a private marketing consultant on projects ranging from brand strategy, market resource, segmentation, CRM, and all of the buzzwords that you can think of. You work with PepsiCo, Sbarro, LE Lilly, Donna Karen, West Bay Group. For 13 years you served in house as a in house professor for LVMH, which is the world’s largest luxury group. And as I’ve mentioned, you’ve written a weekly column on branding for Marketing Week. I mean, you’ve done plenty of other stuff, but like, it will take us 30 minutes to talk about just your pedigree, and your intro, and your bio.
Louis: So, let’s get started into the meat of the problem. You talk a lot, especially during your weekly column in Marketing Week, about the biggest misconception, or the biggest mistakes that marketers make nowadays. Can you pinpoint or summarize the ones that you think are the biggest?
Mark: Yeah, I think there’s a few, Louis. I think the biggest one, I think, is a complete absence of strategy, and that perhaps is the one that I think is most haunting. Then lead to that is an obsession with new completely irrelevant technology, which gets in the way of a focus of doing a proper job. And I’d link all of those issues, you know, the ignorance of strategy, most marketers have never had a strategic day in their lives, and this obsession with virtual reality, and augmented reality, and all this, blockchain, and all this other nonsense. Basically because they don’t have any training in marketing, so they aren’t really sure what the heck marketing is, so they sort of gravitate between whatever the latest hot theoretical or tactical issue might be.
Louis: Just to confirm one thing, Mark. We have never talked before, right?
Mark: No, no, I’m ashamed to say, Louis, I’ve never listened to your podcast. Which I’m terribly embarrassed. I am going to listen to it, I’ve just been on a busy, I’ve been in Japan on a busy job. So, yeah, no, we’ve never spoken before, and I don’t know whether you’re about to bite my head off or agree with me, but that’s my take on it.
Louis: No, but this is it. Listeners might think that I get guest on, and we agree on what to say before, because we repeat the same stuff over and over again, with different twists, of course. But, this is what we’re preaching in this podcast, and you summarize it quite well.
Mark: Oh, very good. Well, that’s good. I mean, that puts us both in a minority. I mean, I run the numbers. I go around the world giving occasional conference talks, if I’m working for someone in a different country. And by my reckoning, around 80% of marketers in some countries, 90, literally have no idea what the hell they’re doing. And so, hence the obsession with Bitcoin, AI, VR, all kinds of other hoo-hah, which is absolutely no relevance whatsoever for marketing. Yeah, it’s a stunning discipline for that. Stunning.
Louis: So, today we’re going to go through a kind of a step by step, or methodology, to actually come up with a good strategy to do real marketing strategy, and to agree on one. And I know you have a methodology that’s quite simple to follow, so we’ll go on that. But, before that, I read a few of your articles, as I mentioned, and there are a few mistakes or misconceptions that I’ve noticed, that you talked about during your articles. One of them that I love is, Steve Jobs didn’t do research. A lot of people in marketing seem to think that because, allegedly, Steve Jobs didn’t do any research, they don’t need to do any.
Mark: Yeah, well it’s a broader topic. That’s the latest in a long line of excuses why marketers don’t want to talk to customers. And this is the most common one as you say in sort of current realms, which is, Steve Jobs is the greatest marketer in the world, or was the greatest marketer in the world, and he had an active disrespect for doing research, and thought it was a waste of time. So, there’s two things here.
First of all, Steve Jobs is a wonderful marketer, he was. But also, he was incredibly good at lying, or as you, a wonderful Frenchman often call it, mythology. Which is not to say it was a personal lie, it was just something that, Jobs is absolutely correct, why would you tell the competition what you do? You will misdirect them at all turns. And one of the many areas where he was very liberal with the truth was in this idea that he was doing research. And we know this was not true because although Jobs occasional said we don’t do research, he was misquoted. What he said was, you can’t do research to work out what the customer wants next. Which, I do agree with.
He did an awful lot of research, however, on brand perceptions, on competitor perceptions, on buying process, and we know that, because when Apple sued Samsung, and then Samsung sued Apple about 10 years ago over a series of patent infringements, one of the things that Samsung eventually got through a court order was more market research than anyone had ever seen in any company in the history of the world. Much of it commissioned by Steve Jobs on the topics of what consumers perceive, what they were thinking, and what they were doing.
So yeah, it’s just a bullshit excuse, often cited by people who are afraid to talk to customers.
Louis: They were saying that the courts sequestered around 800 metric tons of market research from inside Apple HQ.
Mark: Yeah. Not just wrong, Louis. But, completely wrong. You’re absolutely right. And Jobs would spend a considerable amount of his time pouring over the data, and shouting at his executives from what he was seeing. So yeah, it’s an absolute myth. And unfortunately, part of that long history of bad marketers who find incredibly persuasive arguments as to why they won’t shut up, and just go and listen to customers, which is, unfortunately, or fortunately, about 70% of the job, once you put down the VR headset.
Louis: We should’ve talked before. Another one before we go into the strategy, is that reputation take a lifetime to build, but only a few seconds to destroy. You’re making the point that this is also completely bullshit.
Mark: Yeah, and it’s hard to find a company that’s more than 30 or 40 years old that hasn’t had a serious reputational crisis, or two, and has managed to survive it very nicely. I mean, there’s hundreds of examples, if you just take Volkswagen. So, what Volkswagen did, and this is a matter of public record, is commit corporate fraud on a global level. Cheat on emission standards in America, Europe, and various other countries. Produce poisonous gas, which by scientific evidence is probably killing between 200 and 800 people in Europe alone each year, thanks to the increased emissions from their polluting engines, and then lied about it.
Now, that sounds to me like pretty much an extinctive act. You know, you don’t survive that, and yet, Volkswagen sales were up the following year. So, it’s not the, brands are not the precious, incredibly vulnerable things that most people believe. They’re quite robust entities, and reputations are very hard to destroy or rebuild for that matter, perceptions are far more bouncy than I think people realize.
Louis: There’s a counterexample to that. I mean, there’s plenty of counterexamples. It’s true that some brands nearly died, and then survived, and then managed to stay for the long haul. I remember this story about Corona. I don’t remember if it’s the 70s or 80s, or something, but they were, a rumor spread that employees were pissing in the Corona beer before putting them into bottles. And that was actually coming from Heineken. They found it back to the Heineken, or I think, Heineken was it, and their sales plummeted. Corona’s sales plummeted for a few years, but they survived, and they managed to then fight this, and they are now at, I think they’re selling more than they ever did. So, it shows, yes, reputations are hard to build, but you can’t just destroy them in one day.
Mark: That’s right. You certainly get dense, and I think that’s fair to acknowledge. You certainly can hit, particularly in fast-moving goods, a significant impact on sales for a short, or quite a long period of time, but killing a company or a brand, it turns out is very hard to do.
Louis: Right. You mentioned–sorry go ahead.
Mark: At this point, Louis. I will have to introduce, my apologies, this comes from home. I have an incredibly annoying daughter, who will occasionally shouts. She’s only 18 months old, but she’s a difficult one, so my apologies to the listeners. But, if you hear screaming, I’m also evening care, so we may have an occasional interruption. So, my apologies in advance.
Louis: No problem. So, you mentioned that marketers, around 80-90% of them, which is a rough estimation on your side, haven’t done any strategy in their life, or they haven’t even sat down to actually do what is a real marketing strategy for their company, or for clients, right?
Mark: Yeah. Unfortunately, I fear that statistic is entirely true.
Louis: Right. So, what is a strategy in the first place?
Mark: So, a strategy is the middle part of marketing. In the sense that I see marketing very much, and by the, this isn’t my personal philosophy of marketing. So, we should maybe back up and say, marketing itself is about 100 years old. And if you study at any level, marketing, you discover that we’ve been saying the same thing for a whole century. Strategy is the middle part.
So, if you imagine that the starting point for marketing, each year, or when you take over a new job, is diagnosis, is understanding the market, building a segmentation. Strategy then becomes the choices that you make about what you will, and actually more importantly, what you won’t do, having then understood and diagnosed a market. And in my world, I mean, and this is how I do it, and I wouldn’t say this is always the only way to do it, but in my world with brands, I would say that comes down to answering three questions well.
Mark: And again, answering what you will, and also what you won’t do. It’s about having clear targeting from the segmentation that you’ve built. It’s about very tight, distinctive positioning to the market, in terms of what you will and won’t stand for, and what your aim is to represent to the consumer. And then finally, a set of, a very small set of strategic objectives relating to what you intend to achieve in the market. Which again, in my world, is in the next 12 months.
Mark: I don’t believe planning on more than a 12-month cycle works at all, in marketing. In finance and in corporate world, it does. But, in marketing, what will be your goals, specific goals and objectives for the 12 months ahead. So, for me, that’s what strategy is. It’s making choices about who we will and won’t go after. What we will and won’t stand for. And what we will achieve by a certain time period.
Louis: It’s to say no more than to say yes. It’s really to say, “We won’t do that, and that, and that.” More than to say, “We will do that, and that, and that.”
Mark: Yeah, well the number of choices in front of you is always greater than what your resources enable you to do. So, if you take the targeting decision, there’s no rule as to how many segments might exist. But, in a decent segmentation, and I’ve done hundreds of them, there’s usually, let’s say 8 or 9 big segments, only a fool would target all of them. There’s too many. So, there’s the choice about which you will and won’t target. And with positioning, there’s literally a million different words, adjectives, and associations we can choose to communicate, and associate with our brand. But, in reality, my experience says that if you go for more than 4 or 5 things, none of them will ever work.
So, yeah the choices of what you don’t go for, are far greater than the ones that you actually do.
Louis: Let’s take this scenario that you are already working with a company that have a few marketers in-house, and they want to grow, and they’re maybe struggling to find out what exactly to do in marketing. Their marketers are chasing the shiny new object. Blockchain and whatever, and you realize that what they’re doing, first of all, is actually a proper marketing strategy. So, how do you go about it? What is the exact first step you take in order to come up with a proper strategy?
Mark: The first step in any marketing strategy is to step backward. And this is the point normally missed by most marketers, who are in a hurry. So, the first thing you do is acknowledge what we call market orientation. So, the great catch of marketing is that the minute you start getting paid to work for a company, or product, or service, it is impossible to see that product the way the customer sees it. And the first law of marketing, if you will, is to recognize that, and to realize that you will never see that product the way the customer sees it ever again.
And that is a much more deceptive step than it sounds. So, normally I beat that into my clients and customers first. And show them how little they know about what customers really think. And literally what they think is up, is down. Black is white. They really don’t get it at all. And that’s to set that, create almost a vacuum of market orientation, which says, you are not the customer. And when you build that, that vacuum then demands that you do research. And the reason you have to have market orientation before you start doing market research is I’ve met plenty of brand managers who have a giant folder or file filled with a big survey on their desk, but they don’t either look at it, or if they look at it, they don’t believe it. And if they believe it, they don’t use it. Because they don’t have market orientation.
So, the first thing we do before we turn the lights on with research, is make everyone appreciate that we’re sitting in the dark, and that’s a very, very important step. Without it, in my experience, research is done for the sake of it. Not because the client is petrified that actually everything they think is wrong, which for the most part, it usually is.
Louis: So, how do you do market orientation? Because you say you bring those kinds of results in front of them to tease them, or to explain that they are far away from the truth, but how do you come by this data in the first place?
Mark: Well, it’s not even data, right? It’s almost the, it’s almost the confrontation of the other. So, it really depends client to client, and there’s many different things I’ve done over the years. The most common route to getting a client to see this is just to do a simple poor man’s ethnography, and take them out into the field, and get them to hangout with customers while their products are being chosen, and consumed. Even focus groups, although, they’re more expensive, can be a brilliant way within a matter of minutes, of not necessarily generating insight to begin with, but just showing them that the 10 things they think are most important are relatively meaningless.
So, often it’s just the confrontation of very simple qualitative data that will begin that process. It can even be done with sometimes with secondary data, or if a client is good, you can just show them other examples of other clients, and how what they thought was right, was wrong. And they begin to realize, well we don’t know any of this either. I must say as well, I mean, one of the helpful things about being relatively old now, is I normally work with clients who know who I am, and often are hiring me for the reason, for this very reason.
So, often I have a senior CMO, or marketing director, who the first thing they say to me is literally, I literally had a meeting yesterday with a new marketing director for a large medical company in Asia, and he basically said to me, and I’ve worked with him before, he said, “Look, these guys,” and he means his guys, “These guys think they know all the answers. You need to show them first of all that they have no clue. That’s the first thing I want you to do.”
Mark: So, it really helps to have a senior person that already is a proper marketer. And they’re basically saying, “I can’t tell them. You tell them.”
Louis: Oh, okay. Interesting. So, this is something that I’ve learned from my small experience that works really, really well, is as soon as you even have one customer that you’ve talked to, let’s say face to face, and you’ve experienced what they are experiencing.
Louis: You only need this one story sometimes to really show the other person or the client that they’re completely wrong. One story is usually more powerful than a spreadsheet show, to prove your point.
Mark: You’re absolutely right. Really, that’s basic falsificationism. Right? You don’t have to disprove, I did a talk many years ago at CEIBS, the big Chinese Business School. And I did a lot of qualitative research when I was an academic, and I had this study of six households, and I filmed them watching advertising for about three months, and what they did when the ads came on. And when I presented this paper, this incredibly arrogant Chinese marketing professor, sort of jumped in about a minute into my presentation, and said, “You’ve got six households. How can that even be representative? That’s the problem with work like yours. It’s so limited, you can’t trust it.”
And so, I waited until he was finished, and then I took him apart limb by limb, using popper and falsificationism, which basically all quantitative research is founded on no theories ever proven, it’s tentatively accepted, until we disprove it. And I said to him, “Look, if you shut up and listen to the rest of my paper, you’ll find that all six households disprove three main theories of advertising.” So, the question isn’t, why have I only got six. It’s why I’ve got five more than I need to disprove half the theories that you’ve been teaching your students.
And that went down really well.
Louis: Laughs. I can imagine, yeah. Right. So, step one, you kind of make your point. You create this vacuum.
Louis: Step two, market research. So, how do you go about it? Let’s remember one thing. Our listeners are not necessarily working for big companies. They might have their own business, or they might even not have a business to start with. So, let’s try to give them some things that they can also take away in their own life.
Mark: Yeah. Look, so good market research, even on a very limited budget, and I think there’s a correlation between limited budgets and better research, and there’s better insights actually. But, there does need to be a little bit of money or time. It’s always a combination of qual into quant. Again, one of the major areas that many companies make is they jump straight to quant, and ask all the wrong questions.
I trained McKinsey consultants for five years, and this was a constant issue. They’re good, very good quantitative market researchers, but they do a conjoint study, and they very proudly show you the results in the training program, and I say, “That’s great. Where did the variables come from?” And they sort of go, “Oh, well we just kind of worked what they were.” And I said, “Well, then you’re conjoint is pointless.”
So, qual produces the qualities. And you get qualitative from you know, if you’re in a small business, even if you’re in a big business, it’s better to do your own qual. I like ethnography, and just getting out into the market. Certainly, focus groups are less sensitive but more efficient. Any qualitative method basically where you shut up and learn is the first stage in the process. And then at some point, segueing what you’ve learned, the qualities, into a decent quantitative instrument, and doing a survey. In business to business, if you have less than 250 customers, I think you can get away with keeping it at the qual level, because getting representation isn’t really going to be difficult to do, even with one on ones.
But, where we have a big consumer business, or a medium size consumer business, a decent online survey, and a representative sample, which is surprisingly easy to achieve at the level of confidence that we need, then produces, I think, a decent set of insights that really form half of the diagnoses. So, you know, I’ve done my qual and my quant. I see that really as the nice combination, and again, it doesn’t have to be fancy. I trained a lot of marketers around the world, and I’d say the best options usually are a bit of ethnography in the market, watching the customer, listening and talking, into a representative survey.
Nothing fancy, done yourself on Survey Monkey. Analyzed properly. And then a bit of qual at the end, maybe to interrogate some of the apparent segments that come out. So yeah, for me, market orientation is stage one. Leading to a good bit of, you know, for me research, market research is a dirty business. It doesn’t have to be perfect. And most marketers I meet will tell me, “I’m a little bit worried about doing research in case I influence the results, or in case I don’t calculate it right.”
Mark: I say to them, “You have no research. I don’t care what you are worried about. You should worry about not being able to do anything, because you have no research.” Again, excuses for why we don’t do it. Get your ass in the field. Shut up. Listen and talk to customers. Ideally do a little bit of online quant. And you know what, you’ll learn a bunch of stuff, and that will make you able to do your job. And so, for me, yeah market research is the first major part of diagnoses, and the bit that follows, and this is a key point, is segmentation.
And so, the last part of the diagnoses stage is segmentation, because segmentation has nothing to do with you.
Louis: So, I need to interrupt you there.
Mark: Sorry, please.
Louis: Because you mentioned a lot of interesting stuff in step 2, and I think we need to dig slightly deeper into that.
Louis: So, from my small experience, as you said, a lot of marketers are afraid of doing this, right? They are afraid, and they are finding excuses not to do it, because they are afraid of the result, they are afraid to talk to people, they are afraid that they will be exposed, and all of that. So, what type of, if you have to say like two or three questions that you usually like to ask, whether it’s online surveys, or face to face with people, what would it be?
Mark: Well, for me, I mean, these days, it doesn’t matter how big the company is, the world of quantitative research has been completely revolutionized by panels. So, you can now by panel, I mean, most big clients I work for, even national brands. I can go in there, and this is no exaggeration, and I can say, “I need about $12,000, about 8,000 euros, 6,000 pounds,” and I can get a representative sample of customers to answer 30 questions. So, we’ll do the analyses ourselves. So, whatever they’ve been spending, and I had one client whose spending $450,000, we can quickly get rid of all of that crap, and we can build a very simple questionnaire that works. So, what are the key questions to your point?
Well first, we don’t need to ask any demographics anymore, that’s pointless. Because every good piece of panel research has extensive demographic data for these people. So, the days of asking demographic questions are over. And that then really leaves you with only two or three requirements. The first set of questions should be a standard hierarchical funnel. So, you should ask four or five questions that build whatever you think is an appropriate funnel for your category. The generic one, which you shouldn’t use, but along the lines of, an awareness question, if they’re aware, repeat the brands they’re aware of into consideration.
If they consider them, repeat the consideration into preference, repeat the preference question then into loyalty, if they’ve bought it before using that promoter. So, you’re building a very simple buying funnel with four or five hierarchical questions. Next, you’re going to ask a bunch of attributes about your brand, and one competitor brand. Those attributes will have come from the qualitative research, and you’ll probably be pulling negative, as well as positive attributes. You want them both in there.
And you want to ask about a competitor, not because you’re measuring the competitor brand, but you want to get a sense of how much you own those attributes, versus your main competitors. And the competitor comes from the considerations that you’ve already asked in the funnel questions.
Louis: So, the attributes, so give me an example of an attribute.
Mark: Okay, so I’d phrase it as a like it scale, so agreement scale. So, let’s say my research, I’ve learned that I’m a cool brand, I’m seen as an intellectual brand, and I’m seen as a brand that is reliable. I’m going to turn all of those into simple statements, and ask the consumer, how much do you agree on a scale of 1-5. One, disagree strongly. Two, disagree. Three, neither. Four, agree. Five, agree strongly. That my brand is an intellectual brand. That my brand is a reliable brand.
Now, you’ve also got some negatives. So, let’s say we also found out that we’re seen as being too expensive. You ask these, too expensive. So, what you’re doing is you’re quantitatively measuring whatever attributes you’ve found in your qualitative, so now we get representation, so now we get magnitudes, and we also get causality. So, now what you’re going to do is you’re going to take your funnel research, and you’re going to take your attribute research, and you’re going to correlate your attributes against the funnel.
So, what you’re not going to do, unless you’re stupid, is ask the consumer how important is reliability in making your purchase? Because the consumer doesn’t know, and it’s also a question, which costs you money. So instead, you’re not going to ask any question. You’re just going to take a sample, and you’re going to look at the correlation coefficient, between how much, the more people who think I’m reliable, does the likelihood of consideration or preference, or recommendation increase or decrease. And so, that gives you the importance score.
And so, what you’ve got from that data is everything you need for the later steps in research. You’ve got what the customer thinks. What they think of your competitor. And how important those things are in driving the various steps in the purchase funnel. And so, yeah, I mean, it’s funny again, I had a discussion last week with a client. I don’t think you ever need a questionnaire with more than 30 questions, or you’re doing something wrong. But, we got to 50, and it was pretty punishing, because I couldn’t kill any of the questions. But, my point is, normally a good questionnaire is elegant, and has very few questions, because we know what we’re going to use those questions to do next.
Louis: Right. So, that’s a pretty comprehensive answer. And you’ve said a lot of things that I’ve never heard before, which by causality, I think a lot of listeners have never heard that before. So, thank you for digging into that. So, step 3, you mentioned is segmentation.
Mark: Yeah, so the segmentation thing is very important, philosophical mistake that many, most companies make. Segmentation is not the same as targeting. Targeting cannot happen yet. STP segment target position, happen in sequence. Segmentation has nothing to do with the company or brand. We call it market segmentation because it’s about the market. And if your competitor was as smart as you, and by chance had the same data as you, they could in theory produce exactly the same segmentation, because they’re looking at the same market. And so, that’s a key point here, segmentation is part of diagnosis. It’s about mapping the mountain. Not climbing the mountain, just mapping the mountain. The climbing will come later. And most companies go wrong, because they’ve already got a target segment before they finish their segmentation.
So, they’ve already decided how they’re going to climb the mountain, and they haven’t fully understood the mountain yet, and this is important because segmentation teaches us what to do next. And really reaches out its hand, and will show you where to go. And so, that segmentation point is building a decent, complex, but ultimately revealing picture of the whole market. So, everyone in the market should be in there. That could be possibly in the market.
And a decent segmentation, obviously you’re going to be part, you’re going to be in one segment or a different segment, but also a good segmentation should end with a couple of things. It should have a good name to describe the behavior inside the segment. It should have the proportion, or the size of the market in millions or hundreds of thousands. So, how many people are there? It should have a dollar value for the total value, of all of those people consumed your product. And finally, it should have your current market share of that segment
Mark: And if you can show the market segments in that way, it intuitively then leads to very clear, and elemental targeting next.
Louis: Okay. And how do you come by this data around market share, and all of that?
Mark: Well, you’ve got to run some estimates. But, if you’ve done your quantitative research on a representative sample, you can take the, and again, just to pause there. Representative samples are something, again, most people don’t understand. I have a PHD in marketing, so let me quickly tell you how to calculate a representative sample. Go to Google, and type in, “Survey Sample Calculator.” Enter the population, I mean, they teach classes on this. Like for nine weeks in business school, because they have nothing else to teach the students.
Go to Google, survey sample calculator, if you’re going after, I don’t know, French engineers, and you know there’s one million French engineers, that’s the population. You put that in, your confidence level should be 95%, all that means is if I do this 95 times out of a 100, I’ll get the same result. And your confidence interval should be 5%. That means roughly the same as plus or minus five, you can change those, but that’s kind of the standard that we would expect.
And so, when you put that data in, if you’re going after a million French engineers, you’re probably going to discover you need about, I’m guessing here, maybe a sample of 300, and you can then maximize, if you take your 300, and multiply it out to make it into a million, those sizes that you captured in your segmentation will be pretty much analogous to the total market.
Louis: Right. And I really thought that you were showing off with your PHD.
Louis: That’s a very smart answer, so well done. I was expecting something different. Right, so with a sample of around 300 people, you have, it can be almost certain that you can draw the full market. You can make assumptions on the full market, and really start to do some proper segmentation. So, that’s step 3. What is then step 4?
Mark: So, step 4, you’ve got to then get into strategy. So, step 4 begins the strategic middle part of marketing. So, here we’re making the first choice, which is targeting. Where do I want to go, and where do I not want to go? There’s a tremendous movement in marketing, thanks to Byron Sharp and Ehrenberg-Bass, best to target everyone. There’s a case for that in low involvement categories, sometimes, by in large, it’s overstated. You don’t have unlimited resources, most of the time. And so, I prefer to target one segment only, if it’s big enough. And go after it, pretty much with all my resources. But, you know, it’s a matter of strategy at this point.
How good is your sales force? How many dollars do you have? Which segments look attractive? But, my point is one target segment makes life a lot easier. Every time you add a second one, by definition, they’re different markets now. You’re going to have to do things differently. So, targeting is really all about making these choices. And here we begin to see who is, and who isn’t any good at this. This targeting choice separates the girls from the women, and the boys from the men. A bad marketer now ends up with 7 priorities, and they’re all, you know, high priorities, or priority 1, priority 2. That’s all BS. What you really want is, I’m going after that segment and that segment.
Clear, demarcated decisions, with a clear logic.
Louis: How do you make this choice?
Mark: Well, you’d be surprised. If your segmentation is good, it tends to be pretty obvious, which ones you’re going to go after. The only big question is how many. So, my rule of thumb is, if I find a big enough segment, so what you’re trading off here is, this segment based on what they do, their size, your current share, the competitors that own it at the moment, does it look like a place where I can make money? Does it fit the product that I am currently marketing? Does it look rich? Does it look big? Does it look easy? Does it have influence on the other segments through spill over?
And so, there’s a myriad of choices. A good segmentation with all that data inside the cells, to be honest with you, it’s almost like the segment will tell you, “Hey, over here. You want to come here.” It really is that explicit. The only trick is working out how many segments you really want to chase. And again, my experience is, if you can go after one big one for a year, maybe two or three years, that’s where you should start. So, you’ll find that a good segmentation, it’s pretty straightforward. If you have an idiot sales manager in the room, he or she wants to go after everyone.
But, again you spread yourself so thin like peanut butter, that you make no money.
Louis: And I think this is the rule #1. Even if you have a small business, or looking to start one, or you’re working for a small company, usually a good way to understand which are the people you need to go after first, are like your most profitable customers, or people who look like them, right? It’s like those people who spend the most with you, recommend you the most, drain your customer service department the less. And how can we get more of them?
Mark: You got it, you got it. I mean, one of the great joys of Facebook, among its many perils, is look alike targeting is fundamentally that. I mean, you’ve got to be happy with a customer, not only because they’ve paid you some money, but because they’ve found you, and they’ve come through you versus all these competitors, and they have a reason for picking you, and hopefully they’re happy. And as you say, this is much more important than the sale. There are many more of them out there. And so, absolutely right, you really want to use the existing customers to help you target future customers. And that’s a dirty, simple, brilliant secret that’s missed by most marketing people.
Louis: Yup, I agree. Right. So, you have that. You have your segmentation. You know which one you want to go after. And as you said, it’s a matter of choice. It’s about saying, no, 90% of the time, 95% of the time, and picking those 5%, the people that you want to go after. What’s the step after that?
Mark: So, now we can do positioning properly. You can’t position to everyone. Again, if you look at the Ehrenberg-Bass stuff, it’s all about targeting everyone. And also, they don’t believe in differentiation. But, that’s because they’ve targeted everyone, and you can’t be all things to all people. When you’ve targeted a segment, and you’ve really carved them out, they want certain things. And it’s much easier then to link, hopefully, your brand or product to those things. And so, a clear segment gives you a clear line of sight into what this segment wants, and how they buy. Another great point that is often missed is, I think most marketers grasp that in a segment, by definition, their behaviors and needs are different.
It’s always the competitive set. So, when you do proper segmentation, you discover that there aren’t eight different competitors in the market. There’s one or two, usually one, that owns that particular segment. And that, by definition, is who we’re positioning against. So, positioning, becomes much easier now, because we’ve got a much tighter cluster of people who want the same stuff, and a very clear competitor who’s currently the person we have to knock down. So, now you’re crafting a positioning statement, and I don’t care what you call this. Brand purpose, brand values, my rule is, brand DNA, I don’t care.
As long as it’s tight, less than five attributes, ideally way less than five, and I just like words or phrases. I don’t think it has to be wordsmithed into a slogan at this point. This is the core DNA. And the positioning must pass only three tests. It must be what the target customer wants. It must be what be what we can deliver, better than or different from the competitors in that segment, and we will make a lot of money.
In my experience as a consultant, we always have.
Louis: And this is the key, I think. This is why your advice is so gold, is that the more targeted you are, the smarter you are, in your positioning, and the way you talk to people, the easier it gets to really pick what you’re going to say, because as you said, it just becomes obvious at a certain point, that those people share the same attributes, and they want the same thing. And they all use either you, or a direct competitor, and it just gets easier from there. You know where they hang out, you know who influenced them.
Mark: You got it.
Louis: You know which channels you should use. It just gets easier. And I really wish that if marketers were doing this exercise, I think they would see the value that it has.
Mark: You’ve got it. That’s absolutely right, Louis. I mean, the analogy I use is it’s like going down hill in a good way. Once you’ve got a decent target segment, the bike just takes off, and you just keep, you get your own velocity, and it’s almost like the plan starts to write itself. That’s when you know you’ve got it right, God has been kind, giving you a nice easy segment. You can’t, not make money from this point onwards. I mean, that sounds strange, but that’s my experience in many, not all, but in many cases.
Louis: So, it’s a shame that a lot of marketers are like really focusing on the shiny new object, instead of doing this exercise, because it doesn’t sound like a, I mean, it sounds like a bit of work, obviously. You have to spend the time. But, it sounds also like a very, very worthwhile exercise, and something makes you then, as the marketer, very, very valuable because you are the one who understands the market and people better than anyone else in your company, or in your agency.
Mark: Yeah, I don’t want to encourage all your listeners to start actually doing marketing, we’re not curing cancer here. It’s much better for me if most of them continue to do VR and AI, and Bitcoin, so I can keep making tons of money for my clients. So, let’s not get carried away here.
Louis: Yeah, yeah, that’s right. Let’s keep it for ourselves a little bit more. Right. And then the last step, is usually the objective, right? Like what are you trying to achieve at the end of the day, so that you know where to go.
Mark: You’ve got it. So, the last part of strategy is exactly that. So, I’ve got a target segment. I’ve got a clear position to the segment, and then I can go back to my funnel, have a look at where are the blockages, and what I’m trying to do is workout one, two, clear smart objectives, which relate back to that funnel. So, that’s what objectives look like. And they have to be smart, so they, again, A.G. Lafley, the old boss of Procter and Gamble, was brilliant on this.
He wrote a book called Game-Changer. And then another one called How Strategy Works. And in both books, he makes the same arguments, which is, most companies have 12 objectives, and they’re not really objectives, because they have no real date or means of delivery, and there’s 12 of them. And he calls them, he says they’re not objectives, they’re dreams that won’t come true. And he’s so right. So, I push my clients, I like, one, two, in a real squeeze, three objectives, because again, each one demands resources, and time, and effort.
So, the analogy I use is, moving boulders, big heavy boulders from one field to another. They’ll be other years, and they’ll be other objectives, but we try and move too many boulders in one year, we’ll move none. So, what’s the main one that you want to focus on? This year, let’s move that. And then we’ll go back and move others in future years. And so, a good objective is, I’m working with a beauty brand at the moment, increase preference from hand cream among the studio’s Asian segment, from 12% to 19%, by December 2018. And that’s the objective that we’ve said will drive the most money, for this particular brand team. They’ve got all their marketing bonuses hinged on it. We will remeasure it in December, and we will see if they’ve achieved it or not.
So, it’s a very clear and explicit process.
Louis: Right. Let’s move on from this exercise. Thank you so much for spending the time to go through it step by step, and hopefully not that many marketers will listen to this episode so that it will be, you won’t be out of a job. But, I don’t think it’s going to happen, Mark. I think you have plenty of market share.
Mark: I think we’re safe, Louis.
Louis: Yeah, I think we’re safe. So, you work with a lot of brands, as you mention. One of them is like PepsiCo, right? And one of their products, a lot of products are like very sugary, and clearly bad for your health.
Louis: Was there, so why did you choose to work with them? Because you sound like a very no-bullshit guy. And yet, to sell some products that are not necessarily the best for people. Have you refused to work with any businesses where you don’t, you didn’t believe in their product?
Mark: Not so far. I mean, I’ve even worked once for big tobacco.
Mark: And I’ll be very clear how I did it, but I did. There was a big major piece of work too, and I was very clear with them. I said, “I’m not going to help you sell more tobacco.” But, the job was specifically to identify essentially how many brands to kill, and how many people to lay off, as a result of what might turn into plain packaging, if cigarettes were commodified. And in that sense, because I wasn’t helping them sell any more cigarettes, but working out how they’re going to lay people off, I felt comfortable doing that.
Certainly if the information had been used to sell cigarettes, I think that would’ve been my redline, as it were. But, to work out, here’s the implications, and here’s what you should shut down. I thought about it a lot, and I thought, well that’s not, it was a very small job. But, I thought, well I don’t have a problem with that, and I’ll do the work.
Louis: I think Australia was one of the first countries who have plain packaging, no?
Mark: Yeah, it was. And it’s begun to rather, it’s been very, very successful too. Brilliantly done. Even to the point of identifying the least attractive font, and the least attractive penton for the packaging. I think it’s a major contributor, and again, I think that’s very well done indeed. I obviously can’t tell you what my research revealed about how many brands and people they should lay off, but it was significant.
Louis: So, it was really anti-marketing exercise? What is the packaging you currently find that is the least enticing, the least beautiful, that would prevent as many people as possible to buy them?
Mark: Yeah. And that was something that was done by a different team working for the, I think, one of the health groups here in Australia, and I was telling the cigarette companies, well first of all, it’s brilliant. I certainly wasn’t giving them any way around it. And I said, “This is the impact that it’s going to have. So, this is what you should so, and how you should close things down.” That was my contribution. So, I don’t normally do that kind of work, but my points, oh gosh, I’ve got someone ringing me. Sorry, Louis.
Louis: No problem.
Mark: My point is, I’ve worked for luxury brands, and as you say, I’ve worked for companies selling soft drinks. I feel comfortable within the premise of you give customers what they want, and then they make their decisions. I think if they were making outlandish claims, or claims that were untrue, that would be a different story. I don’t think capitalism is bad. I don’t think it’s the best thing in the world for people or society. But, it’s a lot better than most of the other stuff we’ve got. And may have some positive impacts.
So yeah, ethically, I think as long as I’m not, I don’t find myself doing something which involves causing direct hurt to people, or animals, think I would be comfortable with most jobs. I have been so far.
Louis: Right. I’m not sure we have a lot of time to debate this, but I would love to debate that, when you said that people, you give people what they want, this is where I would say, for soft drinks, as an example, I’m not trying to pick on Pepsi.
Louis: I’m just picking that as an example, I think it’s pretty clear that when you have a population that is not necessarily as educated, as other segments per se, that they are being fed ads that are not necessarily, not lies, but not really the truth either. They are really, you know, it’s putting lipstick on a pig. It’s like, making it sound cool and all of that. It’s very easy to be manipulated to thinking that this is what you want, right, in the first place. I would argue that sometimes people don’t really know what they want, and they’ve been manipulated to think that this is what they want, right?
Mark: But, there’s an old argument here, Louis. So, this is obviously affecting you quite badly, and making you buy things that are bad for you, right?
Louis: Yeah, I mean, not necessarily me, but I’m thinking for people who–
Mark: No, no, no, you see. There’s your problem right there. You can’t be arguing that there are some less intelligent, less switched on people, who suffer from marketing, but you yourself are immune to it. That’s the average Englishman, Frenchman, or American. No, if you ask them, do you think advertising is bad, because it influences people and makes them do bad things? They say, “Yes, 100%. Yes.” And you say, “Does that do that to you then?” They go, “No, no, no, not to me.”
Louis: No, it does. Let me finish. Yes, it does. And I probably didn’t answer that question well. But, it does, and I do sometimes do it on purpose, like looking at ads, and really thinking if I’ve been influenced to buy it. And yeah, I’ve been influenced to buy many, many things, because of ads throughout the years.
Louis: But, I guess the point is that, does ads, like people don’t realize that they’re influenced by ads that much, and by marketing and advertising that much, right?
Mark: I don’t know. I mean, I think at the end of the day, we’ve given marketing too much credit for being too strong. When in reality it’s quite weak. And at the end of the day, I think consumers are smarter than we think. But, as you say, it’s a very old, very long debate to which there is no correct answer.
Louis: Yeah. And I didn’t mean to imply that some dumb people are now inclined to buy Pepsi stuff. I was just trying to make a simple example. But yes, everybody, I think, are influenced somehow by brands, and ads, or else they wouldn’t do it, right?
Mark: Yeah. No, no, there’s definitely an impact, but you know, not as strong as I think many, I always say, the way they described marketers in much of the press, I’m like, have you ever met any of these guys? They can’t find their ass with either hand.
Mark: They’re not genius manipulators of opinion. They literally have no clue what they’re doing. There’s a real disjuncture between the market we’ve been describing for the first 40 minutes and the one that’s somehow manipulating people to do what they want. Most of them have no clue what they’re doing with their money. That’s the reality.
Louis: So, they couldn’t find their ass with both hands. This is what you said?
Mark: This is a scientific term, yeah. It’s a scientific term.
Louis: Laughs. I love it. I’ve never heard that before. That’s pretty good. What is the biggest marketing fuck up in your career?
Mark: Oh! There’s a few to go for. What would I say? I think probably Erickson, I worked with this really great team in Sweden on some branding for Erickson, and this is a long time ago. And I really had no clue what I was doing. And it’s my fault, not their fault, because I was the consultant at the time. And we just did all this branding stuff, that I since learned is basically pointless, and I lead them down the garden path. So, we had like seven slides to describe the brand essence, and we didn’t engage anyone in the process. We just sort of launched it on a stage, and we had innovation, and integrity, and all that crap in the positioning.
So, I think that’s the worst I’ve ever done.
Louis: And so, the reason why it didn’t work is because you came up with too many attributes?
Mark: There’s about 300 reasons why it didn’t work. And all of them were reasons I should’ve known, because I was meant to be a consultant. But yeah, too many attributes. The same attribute, everyone uses integrity, innovation, trusted partner, if you don’t know what you’re doing. They’re signals that you’re an idiot. So, you know, I was an idiot. I’m happy to admit. And then we didn’t engage anyone around the work. We just surprised them on stage with a rhomboid and a triangle, and a circle with trusted partner in the middle. I mean, it was, yeah it was pretty bad, pretty bad.
Louis: Yeah, that sounds awful. Did you get fired, or did you lose the client because of it?
Mark: Yeah. Pretty much, I mean, in the end, it just didn’t work, or I didn’t get any traction. We felt pretty good about it at the time, but it didn’t work, and quite correctly, Erickson didn’t use me again. And I think that was a choice that 20 years later, or 15 years later, I would’ve encouraged them to make.
Louis: I appreciate your candor in sharing that with us. What do you think marketers should learn today, that will help them in the next 10 years, 20 years, or even 50 years?
Mark: The same stuff. The same stuff. Most marketers I’m now training, they should go and learn marketing. It’s very simple. We’re 100 years old. They need to learn how to do research, segmentation, targeting positioning, pricing, integrated marketing, distribution, only channel distribution, product development, a little bit of brand tracking, a little bit of brand management, and they’d be in very good shape. But, most of them won’t do that, because they think marketing is, all old marketing is dead, and all new marketing is, requires something new. So yeah, I’d say the next 10 years, if you really wanted to be successful, you just need to be trained well. Not to be tactical, but to be strategic, and you’ll be fine.
Louis: Where does one get trained in marketing?
Mark: Well, it’s tricky. I can’t defend many of the ways, I mean, the American Business Schools were the place where I went to learn my art, and I certainly don’t regret it. But, that was back in the early 1990s. I despair on the quality of marketing professors in general. There are, of course, some notable exceptions. But, marketing is increasingly taught in business school by people that have never done marketing. So, how can they be any good at teaching it?
So, for me, I guess I’d say at a good company. It used to be Unilever and P&G. They’d train you up well. They still do, but they’re a declining force. I think again, Google and Facebook will be the place I would go to learn my art now. Because on top of all the tech stuff, they really are pretty good classical marketers, it turns out. So, that’s probably the place I’d go. I should plug the fact that I run a Mini MBA in Marketing. Based on the course that I, so I taught the marketing core course at London Business School, at MIT in America, a couple of other business schools. And I’ve turned that, now that I don’t teach it anymore at business school, I’ve turned it into an online course that takes about 12 weeks.
And that we run about two or three times a year through marketing week. And we’ve done about two and a half thousand people through it, marketers, so far. That want the MBA quality training, but can’t do two years at a top MBA school. It cost about 1,000 pounds, which is very cheap, I think. Very well priced. And so far, our net promoter score from the 2,200 people that have done it is about plus 75, which is pretty good. And it’s indicative of how good a program it is. So, I’d plug that program as being very good. But, I think a good company that can train, if you’re under 30, go to a top company that can teach you marketing.
Louis: Alright, and NPS score is net promoter score, right? And it’s the question, how likely are you to recommend this product to a friend or colleague?
Mark: Yeah. Sorry, Louis. I’m getting too technical. Yeah, we asked two and a half, or 2,200 people that have done the crouse, how likely would you be, on a scale of zero, not at all. To 10, extremely likely. How likely would you be to recommend it to your colleagues? And so far, I forget the exact number, but around about, more than 70% of people said either nine or 10. And almost no one has said, zero to six, which makes the detractor. So, we’re, it’s a wildly good score. It’s not quite Apple, but it’s not far off.
Louis: What are the top three best resources you would recommend to listeners? So, that’s mostly individual resources, like books, or podcasts, or whatever?
Mark: Yeah, I think you’ve still got to read the Harvard Business Review. It’s not the organ it once was, but it’s still amazing, and some of the PDFs from its history are very, I mean, we still use it in business school as the main source of reading, so I’d have the Harvard Business School on my list. I’m a big fan of Drayton Bird. Spelt Bird, as in, B-I-R-D. Drayton was one of, he’s still alive. He must be in his 80s, he might be 90. Drayton Bird, if you google him, he’s a good website. Which I think has pretty much a lot of great thinking, and he was one of Ogilvy’s, David Ogilvy’s best hires. He worked for David Ogilvy for many years. I think he offers a link back to very good marketing theory. So, I’d have him on my list.
And then last, I would suggest … look, I write for Marketing Week, but I think we’re pretty good. So, Marketing Week, is one of the few, I think, publications that has kept a focus on doing marketing, rather than advertising. And it’s free. I mean, we’re a free magazine with a lot of good analysis. It’s UK based, but my column appears there. And so does certain other people’s. I think it’s really good. So yeah, Marketing Week. It’s worth a look each week, I think.
Louis: So, Mark. It’s been an absolute pleasure. And I really mean it. Today, you’ve taught me a few things, and I know the listeners will learn a lot from you as well. And thanks also for your no-bullshit way of talking about marketing, which I really appreciate, because I try to do the same in my own way. Where can listeners connect with you and learn more from you?
Mark: Look, the best way is just either LinkedIn or Twitter. I’m easy to find. R-I-T-S-O-N. I’m happy to link in with anyone on LinkedIn, and on Twitter, I publish my articles. I write for the Australian here in Australia, in Marketing Week in the UK. So, I publish all my stuff there. So, if you follow me on Twitter or LinkedIn, you’ll get access to my stuff on a regular basis.
Louis: I think your daughter, is it your daughter that you mentioned at they start?
Mark: Yeah. She’s been too good. I introduced her because I figured Roxanne would start shouting. But, she’s probably out in the garden abusing the dogs, which is probably what I should go and do now.
Louis: Alright. Well, once again, Mark. Thank you so much.
Mark: Thanks, Louis.