AMP (BO 1 + BO 2 + BO 3 +….) = AVP
Maybe you’ve heard us describe marketing as a combination of both “art and science.” It is a simple way to clarify that marketing is neither pure creativity nor pure analysis, but rather a balanced blend of both. Said another way, marketing most assuredly values ideas, ideas, ideas…but only those ideas that add value to the brand, to the business, to the company. To this end, it’s simply not enough, then, to demand “Management By Objectives”; we must demand “Marketing By Objectives” as well.
Demanding Marketing By Objectives from the company’s marketing function assumes a couple of basic givens. First, we expect a pre-determined target customer to result for every action that the marketer proposes and executes. Second, the pre-determined behavior is calculable, as in mathematically measurable, for determining its return on investment.
You would think that, as fundamental as these two givens are, Marketing By Objectives would be pervasive among marketing departments. But it’s not. Not even close. In fact, what’s more, the norm across many client industries and companies with whom we’ve worked is the following:
(1) Fielding marketing actions in pursuit of non-behaviors; (2) Linking tactical initiatives to business objectives (like Volume, Profit, and Market Share)—without the essential computation of behaviors in-between the two;(3) Being resigned to the belief that funds and methods are simply not available to measure marketing-action ROI (Return On Investment).
Such a “norm” belies the notion that “marketing math matters.” But it sure does—a lot. So, forgive us for harkening back yet again to review the fundamental matters of marketing math.
- What is and is not a customer behavior? For the one-millionth time, awareness is not a behavior; it’s a state or condition of mind. Yet, it continues to rank among the most commonly cited outcomes for marketing spending. Generating a certain level of brand awareness is helpful, even necessary, to get a target customer to act. But by itself—unlinked to a specific behavior such as adoption, switching, increasing frequency, trading up, or sustaining a purchasing/prescribing—it does not deliver a single sale. Marketing By Objectives, then, demands that each “marketing mix” element the brand spends behind (promotion, merchandising, advertising, social media, etc.) incites one of these behaviors.
- Well-crafted Annual Marketing Plans are all about optimizing the marketing mix: setting the right behaviors with the appropriate elements. No brand’s marketing plan that we’ve ever seen requires only a single behavior—like switching from competitors’ brands—for every one of the brand’s marketing mix elements. Instead, we commonly see that a brand will aim for switching with, say, its advertising; aim for increased frequency with promotion and merchandising; and strive for adoption (bringing in new category users) with its innovation via line extensions or packaging formats. Again, Marketing By Objectives means spelling each of these behaviors out. Moreover, it includes the amount or degree of behavior change expected from each.
- What matters most is discerning the right behavior. For example, a marketer may be looking to open a new category–with a new kind of beverage—the first of its kind. Wanting to succeed with Marketing By Objectives, the marketer sets a certain adoption level as his behavior for this innovation. S/he needs to bring in new users to a new category. The communications need to “educate” potential new users on what they gain from adoption. But wait. Is the new beverage to be additive or adjunctive to the target customer’s current beverage set? Or is it more likely to be drunk instead of one or more of the consumer’s current beverage set? The distinction matters. If virtually all the new beverage volume will be added to what the target customer is currently drinking, education-messaging is needed. However, if the sales volume will come mainly from other beverages that the s/he will partially give up, then a switching-messaging is necessary. These two kinds of messages—adoption and switching—are different.
- What also matters most is getting to the end behavior. Marketers will often make a case for “trial.” They stipulate that achieving a certain trial level is a worthwhile behavior for their promotion, merchandising, or advertising actions. But trial is, at best, a one-time act. What do we expect or need to happen after that trial? Presumably, an effective, quality trial event leads to some level of on-going usage—usually either via adoption (of a totally additive or new to the world product) or via switching from some other product. It’s similar to the awareness dilemma: getting a target customer to try something one time is of virtually no value without the end, on-going behavior (the volume!) that follows it.
- The mathematical composite of all the brand’s behaviors adds to the brand’s annual volume forecast. Now we get to the real math that matters. There’s no more straightforward way to say it: any Annual Marketing Plan worth considering and approving has got to “do the math.” The plan has to show (a) what marketing mix elements we should use; (b) what specific behavior each element aims to incite; (c) the degree or amount of that behavior to be delivered; (d) what that degree translates to in actual “cases” or prescriptions or whatever, of product—the sales volume; and (e) that the sum of all of these marketing mix element behavior “sales” equals the Annual Volume Forecast.—your target sales. Or, as we short-handed in the math equation up-front:
AMP (BO 1 + BO 2 + BO 3…) = AVF
Annual Marketing Plan (Behavior Objective 1 + 2 + 3 etc.) = Annual Volume Forecast
If your Marketing Organization is already “making marketing matter” by consistently doing the math for marketing actions, congratulations! And, kudos to your Senior Management, who obviously insist upon inspecting what they expect from marketing resources.
Make your marketing matter (more)! Read AVOIDING CRITICAL MARKETING ERRORS: How to Go from Dumb to Smart Marketing to create MBO marketing. Learn more here: http://bdn-intl.com/avoiding-critical-marketing-errors
Stay safe and be well,
Richard Czerniawski and Mike Maloney