The CEO is not too happy when he or she looks a sales report showing only a minimal increase in sales at the same time the big, expensive marketing campaign produced a prestigious award for the advertising company. It could be that the advertising agency relied on conventional wisdom to try to understand today’s consumer. An article in the Monday, October 20, 2008 edition of the Wall Street Journal by David Corkindale, professor of marketing management at the University of South Australia’s International Graduate School of Business discusses “Mistakes Marketers Make.” The professor offers seven pieces of conventional wisdom – and why they are wrong. This article should provoke much discussion at the staff meetings in advertising and marketing firms.
Conventional Wisdom # 1 – Companies need to find and target the market segments for their brands.
Why it’s wrong – Market segments at the brand level don’t exist; especially in repertoire markets, where consumers typically buy several brands regularly.
Conventional Wisdom # 2 – Loyal customers are the most valuable.
Why it’s wrong – In repertoire markets, totally loyal buyers of a brand tend to make up only 10 percent of all buyers.
Conventional Wisdom # 3 – There are several way to promote long-term growth of a brand – increasing the customer base, increasing the loyalty of customers and increasing the frequency of their purchases.
Why it’s wrong – The only way to achieve lasting growth in sales is to increase the customer base.
Conventional Wisdom # 4 – To succeed in the market, a company needs to differentiate its products from those of its competitors.
Why it’s wrong – Although sometimes true, it’s not always true. What most customers want is not more differentiation but products and services that are simply better.
Conventional Wisdom # 5 – Promotions bring in extra, worthwhile business.
Why it’s wrong – Promotions can be good for things like unloading stock, but promotions mostly attract existing customers. You give a discount to people who would have bought anyway.
Conventional Wisdom # 6 – The competitor that’s best at marketing the four P’s – product, price, place and promotion – will come out ahead.
Why it’s wrong – Half right. The other half of any consumer product is the strength of the brand.
Conventional Wisdom # 7 – Marketing is all about hunting and capturing clients.
Why it’s wrong – Not anymore. Marketing is about the company being the prey. The Internet allows consumers to hunt; the role of marketing is to make certain that the company’s products and services are found.