July 9, 2007
Who doesn’t admire people who know exactly what they are aiming toward, what they really want to get done? Even after all these years of MBO Management (Management By Objectives), who in business still does not appreciate a meeting that starts with someone stating, “Here are the objectives for today’s meeting”? So why is it that when it comes to investing big bucks in all kinds of marketing activities we so infrequently have in mind what results we expect, other than the obvious ones like, “grow share” or “keep the momentum going”? This week we once again return to the all-important subject of Marketing Objectives, and we take a shot at answering some of the common questions we encounter about them. A fundamental subject, but one that it seems we cannot review enough!
THE MARKETING OBJECTIVE: SOME LINGERING QUESTIONS
We continue to encounter questions about that most basic of marketing concepts, the marketing objective. These questions typically focus on the definition of the term and whether a given goal is or is not a true marketing objective. Honestly, we are often surprised by questions like these because the concept seems so fundamental, even so obvious. But, when we consider that very many marketing organizations train their marketers to think that “growing market share” is the responsibility of Marketing (and not the responsibility of R&D, Logistics, Manufacturing, or even Sales), well, we can begin to understand some of the questions we get. Then, too, we know that fewer and fewer marketing organizations (along with their Marketing Research teams) have the measuring methodologies in place to actually read and track legitimate marketing objectives. Some even tell us, “We would like to measure things like switching and frequency of purchase/consumption, but we simply don’t have the market research funds we need to do these things”
This is more and more the marketing world we live in: investing significant monies in things like sponsorships, promotions, on-premise events, advertising, merchandising and other things but relying on the changes we see in market share alone to assess the effectiveness of the investments. The trouble is, while it’s always a good idea to attempt to link business actions with business results, using market share as the sole measurement is like using a sledge hammer to place a picture-hanger pin in the wall. As they say, it’s an awfully blunt instrument. Sure the Marketing Function is responsible for sustaining or building market share…but so is the Sales Function (what happens to market share when they fail to lock in a key account during a key promotion period?)…and so is the Logistics Function (what happens to market share when they cannot move truckload-sale product to the right places on time?).
In light of every function’s impact on things like market share (or sales volume, or profits) can any General Manager really make the best investment decisions without “getting inside the numbers?” No! So despite this more and more prevalent marketing world we are living in, marketers really must find ways to dial down further, underneath the broader, blunter measures like market share and identify what specific actions they are going to make happen—and be held accountable for. In short, they must find a way to justify their big investments with more precision…by pre-determining their marketing objectives and setting up some methods for reporting them.
But, to go back where we started, for this week’s Boats & Helicopters we will reprise some of the marketing objective questions we commonly hear, along with our best shot at answering them.
BOATS & HELICOPTERS:
- What’s the difference between a Business Objective and a Marketing Objective? The way we always approach answering this one is to distinguish between number-goals that the entire “business team” (all functions) contributes to and those that only marketing makes happen. As we’ve already noted, market share changes happen as a result of the combined efforts of the business team; so do sales volume and profit changes. At times one function within the organization may have a disproportionate impact on these changes, but day-in-and-out, it’s the full functional team that is accountable for them. Not so marketing objectives. These are changes that virtually 99% of the time marketers alone make happen. They are also different kinds of numbers: they measure behaviors and “totals.” Almost any good college marketing textbook will label the “classic” marketing objectives as Penetration, Switching, Frequency of Purchase or Consumption, and Amount of Purchase/Consumption per Occasion. Disciplined marketers will not stop at merely identifying which ones of these behavioral objectives they seek; rather, they will also demonstrate how achieving the desired consumer or end-customer behaviors will build to the required Business Objectives, like market share or sales volume.
- Why isn’t it always a Penetration Marketing Objective when I am able to bring new users into my brand? Penetration is the trickiest of all the classic behaviors. It probably has something to do with the use of the word “penetration” itself. After all, at any moment in time, every brand has a defined penetration level—as in number of households the brand has “penetrated”, or the number of physician practices the drug has “penetrated” for prescription-writing. And there are still some companies using Diary Panel types of tracking studies to read the trends of their brands’ penetration levels. But, actually, True Penetration is about bringing new users into a category or class for the very first time (or, in some cases, bringing long-lapsed category/class users back). When a woman gives birth for the very first time and begins buying disposable diapers, she has penetrated the disposable diaper category. Or when someone suffering from incipient gum disease adds dental floss to her oral care regimen for the first time, she is penetrating the category. Said another way, True Penetration is about building categories and classes more than it is about building brands.
There are those rare occasions when a new category starts with only one brand, so they both grow together and you could argue that building penetration is a legitimate marketing objective for the brand and the category (Viagra, for example, prior to the entry of Cialis and Levitra). But, except for unusual situations like these, most brands that state they are aiming to “build penetration” are probably aiming for one of the other classic marketing objectives instead. For example, say a brand wants to launch a new segment of better-for-you dairy beverages; the brand team wants to build “penetration” for this new segment. But if you look closer at the true, underlying behaviors they seek, you see that they are aiming to get users of other brands to switch (at least some of their dairy beverage occasions) to this new segment. The real behavior they seek is switching. It might also be to get current brand users to consume the brand more…making the true marketing objective a combination of switching from competitive brand users and increased frequency among current brand users. This is getting “underneath” to the actual behavior the marketer seeks.
3. Aren’t awareness and trial also marketing objectives? No. Are they sub-objectives that marketers frequently seek? Sure. So in that very broad sense, they are objectives that marketers sometimes aim for. But they are insufficient as Marketing Objectives (with a capital “M”) because neither indicates an on-going behavior. Awareness is no behavior at all. Would your General Manager invest significant dollars in an effort to inform people only—with absolutely no expectation of a resulting action from the information? Awareness means nothing without the consumer/customer actions and resulting share, volume and profits that follow. As for trial, okay, the act of trying something is a behavior; but if not linked then to some subsequent regular behavior—like an initial purchase or re-purchase, what good is it?
We hope looking at these commonly asked questions makes things clearer. Better yet, we hope just reading this week’s DISPATCHESTM inspires you and your teams to set SMART marketing objectives: Specific, Measurable, Achievable, Results-Oriented, and Time-Bound.
Richard Czerniawski & Mike Maloney
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