That's not a marketing textbook. This is a marketing textbook. Or so Byron Sharp might say.
After university, my first full-time job in 2002 before I became a reporter was as a staff assistant at the Beacon Hill Institute, an economic think tank at Suffolk University in Boston. The organisation – like the executive director, economics department chair Dr David Tuerck – has an extremely libertarian and laissez-faire point of view.
One day, when the staff were having some beers after work, I asked him why the department’s textbooks and institute’s reports did not give equal consideration to all other economic systems – such as socialism and communism – as well.
“Communism doesn’t work,” he replied. “It’s been proven. There is no reason to consider it. Would we offer competing ideas to the theory of gravity just to be neutral?”
All professors must decide how to educate the next generation. Should they be neutral and let students make up their own minds or advocate for the positions that they think are wise and correct?
Some years later, when I studied and then went into marketing after my time in journalism, I read marketing textbooks such as those by Philip Kotler that took the neutral approach. As usual, the theories, models, and case studies were typically presented from various sides without opinion.
Now, Sharp, the director of the Ehrenberg-Bass Institute for Marketing Science at the University of South Australia, has done something similar to what my former boss does. He recently released a new edition of his Marketing: Theory, Evidence, Practice textbook and, upon request, sent me a copy for review.
“Current textbooks don’t cover important issues like media, shopping, and metrics – things that marketers have to know about to do their jobs,” he told me in an interview. “They also tend to be ‘theory’ heavy, such as on the product life cycle, and short on facts and patterns.”
The Ehrenberg-Bass Institute aims to be “the home of evidence-based marketing” and uses its methods to answer questions such as “Are big brands dying?” and “Does the iPhone defy the double jeopardy law?”
Sharp, whose previous work includes How Brands Grow, includes many of the institute’s findings in his textbook. Of course, the book contains all of the material that these texts always have. But what makes this one different is that it advocates for opinionated and controversial ideas on a wide variety of topics.
If you agree with Sharp, the book will be the best thing to come out of Australia since Kylie Minogue. If you disagree, the proclamations will paint with too broad of a marketing brush and leave a bad, Vegemite-like aftertaste. Regardless, the book’s assertive tone adds some Jungle Rain chilli sauce fire to the usually dry material in marketing textbooks.
Note: the paperback version of the text is 796 pages. For brevity, I will focus on the book’s take on some of the topics that I have discussed in this column over time.
Consumer behaviour is mindless and habitual
In an early chapter, the textbook discusses how everyday people – those who do not work in marketing – approach brands.
The findings: most purchasing is mindless repeat-buying. Loyalty programs do not work. Buyers do little research themselves, even with the internet today. Product loyalty comes naturally with use because people gravitate towards the same brands to simplify their lives.
“Many marketing textbooks tend to gloss over these facts about habitual buying, overemphasising rational decision making and thinking,” the text states. “For the majority of brand buying and store choice, habit and convenience drive our behaviour.”
There is a cafe close to my flat in Tel Aviv where I eat lunch, hold meetings, write columns and prepare conference presentations in my work as a marketing speaker. I have gone there for almost three years now – longer than all of the workers and managers except for the owner.
Why did I go there the first time? It was close. The food was good, the people were nice, and it was not too loud to work, so I kept going back. One day last year, the manager told me that I would get a 10% discount every time. As a consumer, I took the offer and thanked her kindly. But as a marketer, I knew that I would cost them 10% in unearned revenue with every order. I would have continued to go there without the discount.
In a larger example, I usually fly on Turkish Airlines for conferences and clients because I think the company has the best lounge and business class in the world. Of course, I joined the loyalty programme. But I would have continued to fly with them without getting a free flight once in a while and costing them unearned revenue.
Secondly, many marketers – especially in the digital world – believe that consumers want to have “relationships” with brands, that people often research products extensively before purchasing, and that brands should take positions on the political and cultural issues of the day.
The text implies or outright states that all of those ideas are utterly wrong: “Marketers have to accept that our brand is a small part of the lives of most of our customers.”
We need “sophisticated mass marketing”
One of the battles in marketing is between the ideas of segmentation versus penetration.
In basic terms, segmentation aims to divide the market into some number of targeted customer groups based on sets of characteristics. Penetration argues that the best results come from broad and repetitive mass marketing to anyone who might be relevant. Segmentation tends to create individual marketing mixes for each group while penetration will usually use take a one-size-fits-all approach.
For those who might not know, Sharp is one of the fiercest advocates of penetration.
“Segmentation encourages managers to think of differences rather than look for bigger commonalities or look for ways to be inclusive,” the textbook states. “This is anti-scale and potentially anti-growth, and could reduce competitiveness.”
“Brand-specific segments generally do not exist – rival brands usually compete as perfectly interchangeable options in what for them is a single, unsegmented mass market. There is no support for the idea that competing brands each appeal to a unique subset of users that look different from the customer bases of competitors. Unfortunately, few marketers are aware of this fact.”
Sharp also criticises the use of database-driven targeting to focus on the customers who purchase the most. “The logic is wrong: marketing efforts should not be concentrated on the heaviest, most profitable customers, but on those who collective will have the biggest differential reaction.”
A common idea is that 20% of customers are responsible for 80% of revenue and that marketers should focus on that smaller group. But in the textbook’s opinion, the key to growth is not to focus on getting existing customers to purchase more but on convincing those who are not customers to buy a product one time. This idea informs many of the book’s ideas on numerous topics.
Sharp argues that marketers should not be over-targeting and instead do “sophisticated mass marketing”. The text’s 11-step process for doing so can be summarised by the idea of segmenting only when absolutely necessary – when the differentiating characteristics relate directly to buying behaviour. Men and women, for example, buy different clothes, so that differentiation is usually important. Location and income, in contrast, are usually less relevant.
“Segments that are non-intuitive, complicated, or mysterious are unlikely to be of practical value,” the text states.
The reality of online versus offline
In this column and at marketing conferences, I frequently discuss the merits and drawbacks of direct response versus advertising. In terms of long-term ROI, Sharp’s textbook argues for advertising.
“While the likes of direct mail offers or programmatic buys online appear to give high returns on investment numbers, they typically skew to those who already buy the brand and are thus inefficient to underpin a strategy of growth,” the text states. “So, for most marketers interested in growth, mass marketing is more cost-effective than targeted approaches.”
Sharp, for example, writes that television advertising costs two to three cents per person, which seems to be a reasonable expense when the alleged fraud in online display advertising is taken into account.
Further, Sharp’s textbook states that as for online retailing, “in some categories, it seems to have reached its peak”. In the UK, one chart reports, only 24% of households shopped online for groceries in 2014. Those households shopped online an average of 14 times that entire year. That does not bode well for those who insist that marketers should be digital-first or even digital-only.
In the chapter of media mixes, the text notes that Australians watched 20.7bn minutes of the 2016 Summer Olympics in Rio de Janeiro on traditional television compared to 325m on digital video and 68m on social media. That is billions compared to millions. Clearly, television is not dying.
In addition, the chapter lists the pros and cons of various traditional and digital media – as well as a section on the aforementioned online ad fraud. Sharp is dismissive of “earned media” on networks such as Facebook – the unpaid posts that reach a company’s followers – because “research showed that such earned media was not of high quality as it only allowed brands to reach their most heavy buyers – which were the easiest audience to reach anyway.”
What the book misses
No textbook is perfect, and each one will always demonstrate the biases of the author – especially in this case. That being said, there are a few issues that I would like to see addressed in future editions.
The book is heavily biased towards marketing in fast-moving consumer goods (FMCG) companies. Most of the examples involve large consumer brands even though, in one example, Forrester estimates that the B2B e-commerce market in the US will be twice the size of B2C e-commerce by 2020. Most of the B2B examples are small blurbs at the end of sections or chapters. Furthermore, Sharp’s textbook does not discuss marketing in the high-tech, SaaS, or startup worlds– where the practices, for better or worse, are often radically different.
Public relations is barely mentioned. There are entire chapters or large sections devoted to the advertising, personal selling and direct response tactics within the promotional mix, but PR is mentioned almost as an afterthought on only a few pages. And when PR is discussed, it is only in the context of media relations and publicity – even though that is only one type of PR. (Too many marketers think PR and publicity are the same things.)
While Sharp discusses social media and search engine advertising, I am still waiting for a textbook that covers “organic” search engine optimisation. It is an important topic because, in one analysis by Moz co-founder Rand Fishkin using data from marketing analytics platform Jumpshot, 95% of the clicks that follow Google US searches are in organic results and 5% are in search advertising. An analysis of the top 10,000 websites in the world by SEMrush, a competitive marketing intelligence platform, found that 87% are in organic results and 13% in search advertising. I will probably wait for such a textbook for a long time because while most marketers understand the principles of media mixes and advertising waste, few know about technical SEO concepts such as schema code and robots.txt files. (For a primer, see this prior column of mine.)
Many of the case studies consist of Australian brands. Examples are easier to understand when the companies are known, so the textbook might be less valuable for the men at work who are not from the Land Down Under. However, it is undoubtedly a culturally positive thing for people to have more knowledge about Australia than what comes from Crocodile Dundee movies.
I have always argued that marketers of all experience levels should read less of the fluff in the blogs of too many marketing companies and more trade publications and quality textbooks. Sharp’s new tome certainly qualifies. But just remember that his strong opinions are not the only ones out there.
The Promotion Fix is an exclusive biweekly column for The Drum contributed by global marketing and technology keynote speaker Samuel Scott, a former journalist, consultant, and director of marketing in the high-tech industry. Follow him on Twitter and Facebook. Scott is based out of Tel Aviv, Israel.