05 August 2009

The 7 Top Marketing Mistakes

In my work with boosting sales and restoring profitability for companies, the Marketing function mostly is the least developed. While managers realize that strong products and industrious sales people are required, it often is less clear what role marketing should play.

Here are some of the top marketing mistakes and misunderstandings that I found:

1. Marketing is Creativity: "While other departments need to worry about facts and numbers, marketing takes care of the creative and soft side of the business."

Advertising agencies like this argument, because that allows them to produce "emotional" brand campaigns "that will catch the customers´ hearts."

While it is true, that customer appeal needs to include emotional elements, marketing needs to lay the groundwork with facts and empirical work to deliver results: market research, segmentation, positioning, channels, campaign, media selection, messages, PR, leads, contacts, etc.

For all these outcomes marketing has to focus on data and empirical facts. While experience will support good decisions with a "gut feeling", it is ridiculous to base huge budget decisions on a "hunch" instead of on a solid data foundation. See also here.

2. Marketing as Service: "Marketing should support Sales with brochures, advertising and trade fair help."

Sure, salespeople need brochures, advertising and working campaigns. However, marketing has a much more important role today: Marketing needs to identify, select and deliver paying customers. As Kotler said, "Targeting and positioning are the keys to business success. Nail these two decisions and everything good follows."

While other functions need to serve customers as well, marketing is primarily responsible for creating and keeping customers. However, in many firms the marketing function is relegated to a quite junior person with little influence and resources ("the Marketing Lady"). The results of this marketing then are limited to the scope of the position.

3. Marketing without Controlling: "Marketing does not need to be measured for profitability."

In the good ol´days, half of the advertising budget was wasted, they just didn´t know which half. Today, marketing needs to be controlled around measurable objectives and metrics.

Every euro that is spent needs to be measured for the results it delivers. If campaigns do not measurably improve relevant metrics, then they need to be cancelled. Some key metrics are:
  • Market share (volume or value)
  • Awareness
  • Relative price (market share value/volume)
  • Number of customers
  • Number of complaints (level of dissatisfaction vs. recommender)
  • Customer satisfaction
  • Relative quality
  • Distribution / availability
  • Perceived quality / esteem
  • Loyalty
  • Return on Investment (ROI) on the marketing budget

4. Marketing lacks Customer Orientation: "Marketing should market our fantastic products and solutions."

Especially in engineering driven organizations, managers expect the marketing and sales functions to sell what R&D have decided customers need. Unfortunately, this product-orientation is long obsolete, but nevertheless still alive and kicking.

Even so, some managers insist to spend big budgets and enormous resources for branding and promotion in order to "persuade" customers to buy. But, in today´s hypercompetitive marketplaces, if a product or service does not hit the customers´taste or need, then even big dollars will not change that.

It is better to ask marketing to really understand the customers´s needs, what they are willing to purchase, and the favorable price targets. This information must be researched on basis of facts and data and then fed into the R&D process. It sounds simple, however, it still is seldomly done systematically.

5. Marketing as a Department: "The marketing department should stick to their stuff."

When marketing is relegated only to the marketing department, then customers have lost the most important advocate in the company. Marketing concerns the customers and therefore the marketing mindset needs to be reinforced across all functions.

With a limited marketing perspective, customers are left alone with their problems. In fact, customers do not care which department screwed up their order. They judge the overall relationship with the company. If they are not happy, they will leave for the competition.

Marketing is more than a department, it is the mindset that customers decide about the fate of the company. Therefore, marketing staff & managers needs to reinforce and coach this attitude across the company.

6. Marketing Chaos: "It is difficult to plan for branding, service and customer communications."

Lack of planning in marketing is a perennial complaint of managers. Of course, marketing is extremely dynamic and many of the market events cannot be anticipated. The above mentioned creative streak adds to the perception that marketing is chaotic and plan- & glueless.

Nevertheless, it is imperative that marketing prepares detailed plans for product development, campaigns, distribution, customer communication (CRM), campaigns, market research, customer service and all other of their duties with deadlines, accountability and budgets.

After the planning phase the marketing managers are responsible to implement these plans and observe deviations so that countermeasures can be devised and implemented on time.

7. Inverse Marketing Logic: "That´s all the budget you get."

Together with the lack of measurement (see Mistake #3), here the marketing logic is perverted. When managers maintain, we cannot afford more marketing budget, then this shows that cause and effect have been inverted.

Nobody should "afford" marketing in good times, just to cut it when it is needed (when customers do not buy). Marketing is an investment and therefore Return on Investment (ROI) is the metric that counts.

Therefore, the marketing budget should not be put together by looking at the competition, the last year or the available cash flow. The key question needed to ask is: How much budget does marketing need to maximize the return on the invested cash? This, of course, requires a bottom up marketing planning.

Of course, there are many more misconceptions in applying marketing principles in today´s competitive markets. E.g. the use of e-business, mobile marketing, global issues, senior customers, social media, etc. In case you know about such a mistake, add it in the comment box below.